Nearly one-third of all Medicare beneficiaries may qualify for a program that reduces typical spending from nearly $2,000 a year to $130.

10:21 AM EST on Friday, December 2, 2005

BY STEPHEN NOHLGREN
St. Petersburg Times

For four decades, Congress scrupulously kept Medicare free of any "means test." Millionaire or mill worker, it didn't matter. Medicare was a public insurance plan, so everyone paid the same premiums, the same deductibles and the same copayments.

That's about to change.

The Part D prescription-drug benefit that takes effect Jan. 1 is a potential bonanza for some people of limited means. They may not have to pay a single monthly premium. When they fill a prescription, they often will pay only $5 or less.

A PriceWaterhouseCoopers study found that out-of-pocket costs for people with limited means will average $130 a year, compared with the $1,950 they now spend on prescription drugs.

As many as one-third of Medicare's 43 million elderly and disabled beneficiaries may qualify.

Because of an asset test, about 2.4 million people with small nest eggs may lose out, even though their incomes put them well within the qualifying range.

"They scrimped and saved, and now we are going to kill them for that, while the people who spent all their money are going to be rewarded," said John Rother, AARP's national policy director. "That's the perverse nature of means tests."

If enough people sign up, Part D's low-income benefit could dramatically alter the social dynamics of drug insurance.

Right now, only certain groups of people tend to enjoy decent prescription-drug coverage: poor people on Medicaid; veterans with coverage through the Department of Veterans Affairs; government and union retirees; and people with sufficient means to buy expensive Medicare-supplement policies.

Millions of retirees, however, have too much money to qualify for Medicaid but nowhere near enough to buy the drugs they need. Gas prices, taxes and Medicare's ever-rising Part B premiums squeeze them into impossible choices.

For them, the new low-income benefit may offer relief, in the form of a subsidy that Medicare calls "special help."

Single people with incomes below $14,355 and liquid assets below $11,500 can qualify. For married couples, the thresholds are $19,245 in income and $23,000 in liquid assets.

Those thresholds are considerably more generous than the qualifying levels for other state and federal programs -- such as Medicaid -- that help poor people with drug bills.

People who qualify for the subsidies will enjoy several benefits. Many will pay no premiums, saving about $33 a month. Others -- at the higher end of the income range -- will pay a partial premium, based on a sliding scale.

Many Medicare drug plans carry an annual $250 deductible, but people who get the subsidies will pay either nothing or $50.

Copayments vary from plan to plan, but they are considerably less for people who get the subsidies. Copayments can run as low as $1 for generic medications and $3 for brand-name drugs.

Most Part D plans have a big "coverage gap": beneficiaries pay 100 percent of drug costs between $2,250 and $5,100 in a single year. People who get the subsidies will pay 15 percent or less in these gaps.

About 6 million low-income beneficiaries are on Medicaid or on special state programs where Medicaid pays their Medicare Part B premiums. The federal government will automatically assign these people to a Medicare Part D plan.

Another 8 million people are not on any Medicaid program but can qualify for a low-income subsidy -- if they apply. The Social Security Administration has mailed letters to potential applicants; so far about 3 million have returned applications.

Though Part D prescription coverage doesn't begin until Jan. 1, people who might qualify for the low-income subsidies should take action now, by filling out an application and mailing it in. Anyone interested can also apply online, at www.ssa.gov.

Robert Hayes, of the Medicare Rights Center, is no fan of the Medicare drug benefit. But he has this message to anyone who might qualify for a low-income subsidy: "Run, don't walk, to sign up."

For more information on low-income subsidies, consult Pages 55 through 62 of "Medicare & You 2006," which the government mailed to every beneficiary; call the Social Security Administration at (800) 963-5337; or call the Rhode Island Department of Elderly Affairs at (401) 462-4000 (voice) or (401)462-0740 (TTY).

For an application, call the Social Security Administration at (800) 963-5337 or visit www.ssa.gov.

To find whether you qualify for other low-income programs that can help with drug bills and Medicare costs, visit the Web site www.accesstobenefits.org; click on "BenefitsCheckUpRx"; and fill out the online questionnaire.