Part D: Low-Income Elders, the Donut Hole and the Election

Article excerpt

Millions of Americans can still enroll in the new Medicare Part D prescription-drug benefit even though the first deadline has come and gone. For most of the 42 million people on Medicare, May 15 was the well-publicized date for them to sign up. Now, the books won't open again until November 15, the start of the open enrollment season for 2007.

THE INCOME TEST

There is a notable exception to this rule: those who are eligible for extra financial help in paying for this new benefit. The low-income subsidy (LIS) was designed for a hard-to-reach group, people who have too much money to qualify for Medicaid-the federal program for the lowest-income group of Americans-but too little to be able to afford to pay for prescription drugs on their own. They are hard to find and hard to convince that a government program would do for them what it promises. Finding them and signing them up is just one of several challenges facing the Part D program-issues that will preoccupy consumers and state and federal officials, as well as candidates running for Congress, in the coming months.

To be eligible for the LIS, individual Medicare beneficiaries must meet an income test for annual earnings: up to $14,700 for an individual and $19,800 for a married couple Iiving together. They also are limited in assets to $i 1,500 for an individual and $23,000 for a couple living together. Assets do not include the value of the primary home and a car. They do include stocks, bonds, savings accounts and cash. Assets calculations can exclude $1,500 as a set-aside for funeral costs.

Depending on their income and assets, eligible beneficiaries could receive the benefit virtually without charge, having to make only modest co-payments for prescriptions. It is a two-step process: First, they have to be ruled eligible by the Social Security Administration (SSA), which handles the applications; second, they have to select and enroll in a Part D prescription plan. They can do this at any time.

The government originally estimated that about 8 million Medicare beneficiaries were eligible for the LIS. About 4 million applied, but more than half had too much in assets to qualify. About 1.7 million have been approved by SSA for the coverage.

For those already enrolled in Medicare Part D, who have significant drug bills, the "donut hole" is looming and could be a financial chasm. The donut hole is the gap between which coverage is suspended and doesn't return until huge bills have been amassed. Hundreds of different insurance policies are being marketed under Part D, but they all must have a $250 deductible, with the government paying 75% of the first $2,000 in drug costs. The donut hole becomes a reality when total spending has reached $2,250. Coverage stops. The patient pays the full bill until total outlays reach $5,100. The patient already has paid monthly premiums, a deductible and co-payment for medications, so the total spending figure of $5,100 translates into $3,600 in out-of-pocket spending by the consumer. After that point, the government picks up 95% of the cost of future prescriptions.

ASSISTANCE PROGRAMS

Now there is a possibility of filling that donut hole. Before the Medicare drug law was passed, many large drug companies had prescription assistance programs for lowincome people that provided discounted or free medications. The programs continued for those under age 65 when the Medicare drug benefit began last January, but some companies dropped these programs for those enrolled in Medicare. Some firms said they feared that giving away medications could violate federal antikickback laws that say a company can't steer beneficiaries toward their own products by giving free merchandise. The Inspector General of the Health and Human Services Department issued an advisory opinion in October that the programs might be violations of the law. But he issued a new statement in April saying the programs are acceptable. …