18.4% of Americans were found to be covered by Medicare in 2020. But not everyone can afford the costs incurred by prescription drugs. That’s where the Medicare Extra Help program comes into play. Under the Extra Help Program, beneficiaries with limited income can get financial assistance on their prescription drugs. Therefore, it is also called Part D Low-Income Subsidy.

The astonishing fact is that many people are eligible for the Extra Help and are not aware of it. So let’s understand what it takes to become eligible and how you can apply for it to lower your prescription drug costs — monthly premiums, annual deductibles, and prescription co-payments.

Eligibility Criteria for Medicare Extra Help Program

Medicare Extra Help frees you from the need to apply when you qualify automatically for it. Here’s what makes you eligible for automatic qualification;

If you;

• Have Both Medicare and Medicaid
• Have Medicare Savings Program
• Receive Supplemental Social Security Income

When you qualify automatically, the Centers for Medicare and Medicaid Services (CMS) sends you the notice regarding Extra Help qualification.

If you do not meet the above requirements, you can still become eligible for Extra Help.

You should be eligible for Original Medicare first. Then, once enrolled in Medicare Part A or B or both, you can enroll in Medicare Part D, where Medicare Extra Help Program specifically assists.

Notably, you cannot enroll in Medicare Part D if you are already enrolled in Medicare Part C, which provides prescription drug coverage already. However, you will be unenrolled from Part C and pushed back to Original Medicare even if you do so.

If you want to switch to Original Medicare, you can do so during AEP (Annual Election Period).

The eligibility of any beneficiary for Medicare Extra Help depends on the following.

The value of your;

• Resources, which includes
  • savings,
  • investments,
  • real estate (other than your home), and

• Income

Your income for eligibility also depends on whether you’re single or living together. In some cases, you can get relaxation on your income limit. Let’s learn each of them in detail.

Resource Limit

Medicare Extra Help is meant for people with limited income and resources. Therefore, your resource value must be limited to $14,790 for an individual or $29,520 for a married couple living together in 2021. 

Here, resources refer to the value of the things you own. Here are some of the examples that come under resources.

• Real estate (other than your home)
• Stocks 
• Bank accounts — checking, savings, and certificates of deposit included.
• Mutual funds
• Bonds, including U.S. Savings Bonds
• Individual Retirement Accounts (IRAs)
• Cash at home or somewhere else

Notably, not all property you own counts as a resource. Here’s what does not get counted;

• Your main residence
• Your vehicle(s)
• Your possessions
• Resources that cannot be converted in cash easily, such as jewelry or home furnishings
• The property you need for self-support, such as rental property or land you use to grow to produce for home consumption
• Non-business property, essential to your self-support
• Life insurance policies
• Burial expenses
• Earned interest on money that you plan to use for burial expenses.

There are many other exclusions, such as retroactive social security payments, housing assistance, and many more. It is suggested to consult the Social Security Administration for other resource exclusions.

Income Limit

Similarly, your annual income must be limited to $19,320 for an individual or $26,130 for a married couple living together in 2021.

The income limits are set by a government standard known as the federal poverty level. The limit keeps changing every year by considering the factors that influence the federal poverty level, such as the cost of living and average income in each state.

In case your annual income is higher, you can still be eligible and get Extra Help benefits. Here’s what makes you eligible even when your annual income exceeds the declared limit.

If you or your spouse:

• Have earnings from work
• Support other family members living with you
• Live in Alaska or Hawaii

Similar to the Resource Limit, not every payment falls into the Income Limit. Here’s what doesn’t get counted;

• Supplemental Nutrition Assistance Program (food stamps)
• Disaster assistance
• Housing assistance
• Medical treatment and drugs
• Earned income tax credit payments
• Home energy assistance
• Others’ assistance to pay your household expenses
• Scholarships and education grants. 
• Victim’s compensation payments

You can contact SSI to know more about other income exclusions.

How to Apply for Extra Help?

Applying for Extra Help is not complicated at all. In fact, it is similar to applying for Original Medicare and other plans.

You can complete the application for Extra Help with Medicare Prescription Drug Plan Costs (Form SSA-1020). You can use any of these methods;

• Apply online at www.ssa.gov/extrahelp.
• Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) to apply over the phone or request an application.
• Apply at your local Social Security office.

Once an application is submitted, Social Security will review your application based on the eligibility criteria discussed above and send a letter notifying whether you qualify for Extra Help.

After being qualified, you can choose a Medicare prescription drug plan. However, if you aren’t eligible for Extra Help, you can still enroll in the Medicare Prescription Drug Plan.

It is also possible that you are not satisfied with the Social Security decision — in case of not qualifying for Extra Help. So, you can appeal to the administration to review the status and get a new decision.

Late Enrollment Penalty in Part D

It is noted that you must enroll in Medicare Part D during IEP (Initial Enrollment Period), which runs between three months before you turn 65 and three months after you turn 65. You have to pay a late enrollment penalty if you join the plan apart from IEP. However, you won’t pay the penalty if you get Extra Help or other prescription drug coverage.

Notably, you will also be exempted from a penalty if you already have prescription drug coverage. However, you have to enroll in Part D within 63 days after your employer, or individual drug coverage ends to avoid a penalty.

If you need any assistance finding a suitable Medicare plan for you, you can contact our licensed agents specializing in Medicare.