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Section 8 Rent and Medicare Prescription Drug Program

On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. Until the new Medicare drug benefit becomes available in 2006, the MMA provides for the issuance of prescription drug discount cards and transitional prescription drug assistance for Medicare beneficiaries who meet the eligibility criteria.

The prescription drug discount card provides Medicare beneficiaries with access to negotiated prices that should be lower than the undiscounted price of prescription drugs.

In addition to the prescription drug discount card, from June through December 2004, Medicare is providing, through the drug discount cards, a $600 subsidy (Transitional Assistance) to Medicare beneficiaries whose incomes are not more than 135% of the Federal Poverty Level (FPL) and who do not have certain other drug coverage. The unused portion of the $600 credit in 2004 will rollover to 2005. There will be a subsidy of up to $600 in 2005, in addition to any rollover.

More information regarding the Medicare Prescription Drug Discount Card and Transitional Assistance can be found at the Department of Health and Human Services website at: http://www.cms.hhs.gov/media/press/release.asp?Counter=990.

A. Annual Income

In calculating annual income for a family, any assistance or benefit received from the Medicare prescription discount card or the transitional assistance must be excluded as annual income for the purpose of calculating any rent or assistance.

B. Adjusted Income

In determining medical expenses for the purpose of calculating Adjusted Income, PHAs and Owners and Management Agents must use the cost of the drugs without the Medicare negotiated price benefit for eligible drugs rather than verifying the out-of-pocket cost of the drugs to the tenant.

The standard medical deduction as described at 24CFR5.611(a)(3) continues to be the sum of allowable medical expenses that exceed 3% of annual income. Where all or part of the cost for prescription drugs is covered by the Medicare prescription drug discount or transitional assistance, neither the drug discount nor the transitional assistance should be considered a reimbursement for the purpose of calculating the medical expense deduction.

NOTE: The Code of Federal Regulations (CFR) is available at: http://www.gpoaccess.gov/cfr/.

The prescription drug discount card program may have an enrollment fee as high as $30. Any person who receives transitional assistance will have the enrollment fee paid by Medicare. However, any person for whom Medicare does not pay the enrollment fee may claim such fees as a medical deduction.

Eligibility

Family members are eligible for a discount drug card if they are enrolled under Medicare Part A or B, as long as they are not receiving outpatient drug benefits through Medicaid, including waivers under Section 1115 of the Social Security Act.

Source:

HUD Notice PIH-2004-11 issued July 15, 2004

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Section 8 Housing Overview

Federal Rent Assistance

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