New "Extra Help" Income Limits
By: Beneficiaries whose incomes were too high in 2005 to qualify for the “Extra Help” part of the Medicare drug plan may now be eligible.; Patricia Barry; Source: AARP Bulletin Date Posted: 2006-02-08 10:22:00-05:00
Medicare beneficiaries whose incomes were a little too high in 2005 to qualify for the "Extra Help" part of the Medicare prescription drug benefit may now be eligible under new income limits published in January.
The new limits are based on revised federal poverty guidelines for 2006. To qualify for Extra Help—which substantially supplements the regular Medicare drug benefit—beneficiaries must now have monthly incomes no higher than $1,225 (up from $1,194 in 2005) or $1,650 for a married couple living together (up from $1,604).
Most people receiving Social Security can add $20 a month to these limits ($40 a month for a couple), as the allowance for unearned income. Also, the limits are higher for beneficiaries who have dependents living with them or who live in Hawaii or Alaska.
Eligibility for this assistance also depends on a person's "assets"—that is, resources like savings, but not including homes, cars and personal possessions. The eligibility level for assets (no more than $11,500 for a single person, $23,000 for a couple) remains unchanged through 2006.
By early February, the Social Security Administration said it had processed applications for Extra Help from 3.4 million people and had approved 1.4 million as eligible. The remaining 2 million were disqualified "because of excess income and/or resources."
The SSA says that people who were turned down but think they may now qualify under the new income limits need to reapply. Application forms are available by calling (800) 772-1213, visiting www.socialsecurity.gov or visiting a local Social Security office.
People who reapply (or are applying for the first time) must give information about their current income, which may have increased since 2005—for example, through the 2006 Social Security cost of living adjustment. (Social Security income is assessed on the gross amount—before the Medicare Part B premium, which went up to $88.50 a month in January, is deducted.)
Even small income increases may be enough to disqualify many people who have already been turned down for Extra Help, according to the SSA. Nonetheless, "it would still be worthwhile applying if your income is within the new limits and you have few or no assets," says Paul Cotton of AARP's legislative health team.
Most people have been turned down because of their assets rather than their incomes. Last year the Kaiser Family Foundation predicted that the asset test would disqualify 2.4 million people whose incomes would otherwise make them eligible for Extra Help.
AARP has long lobbied Congress to eliminate the asset test, arguing that it discriminates against retirees who have saved money and makes the application process more daunting.
Additional Related Links
Savings Are in the Details (December 2005)
A Better Bargain (November 2005)
Medicare Special Report: The Basics
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