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Medicare Drug Credit for Low-Income Will Not Count
Against Other Benefits
July 19, 2004 – Fears that low-income seniors who
receive the $600 credit in the Medicare drug program would have to count
this as income, when applying for assistance from other federal
programs, were quieted today by the government.
This policy clarification came in an announcement
today by the Centers for Medicare & Medicaid Services (CMS) and the
Office of Management and Budget (OMB).
"As the Medicare law intended, low-income
beneficiaries don't need to worry that government help from one program
will take away help from another," said Health and Human Services
Secretary Tommy G. Thompson. "As a result of the new law, low-income
Medicare beneficiaries need not have to chose between food and
medicine."
In a letter to state Medicaid officials, CMS, the
agency within HHS that oversees the Medicare and Medicaid programs,
cites the new Medicare Modernization Act (MMA) that such benefits "shall
not be taken into account in determining an individual's eligibility
for, or the amount of benefits under, any other federal program."
"No one should be disadvantaged under federal
programs, including Medicaid, because he or she is getting some extra
help with buying medications that may be critical to their health," said
Mark B. McClellan, M.D., Ph.D., administrator of CMS. "My agency worked
closely with OMB to assure that the letter of the new law was closely
followed not just by Medicaid, but all other federal aid programs."
OMB today is sending a memorandum to all federal
agencies to ensure
that none violate the new MMA rules. Programs like food stamps,
subsidized housing and home heating assistance are based on a person's
income and assets and an additional $600 credit available to someone
might preclude them from eligibility in such a program or could affect
the amount of the benefit they receive until the $600 is exhausted.
Under the new law, Medicaid benefits may not be
delayed or disapproved because a beneficiary has a discount drug card
that may yield savings on medical expenses. Any discount received and
any portion of the $600 credit used must be treated as if the person had
actually spent the money out of their own pockets when being evaluated
for state "medically needy" program eligibility, CMS' guidance to states
says.
Also, no portion of the $600 credit can be counted
as an asset or resource for purposes of Medicaid eligibility. That means
that a Medicare beneficiary who has a discount card and is receiving the
credit and later applies for Medicaid benefits, does not have to spend
the credit before Medicaid will be awarded or pay for prescription
drugs.
Because the policy is effective as of June 1, 2004,
states will be instructed to reopen cases that may have been decided
before the guidance was issued. The policy does not apply to discounts
or subsidies received through health insurance or other discount
programs like those often offered by drug manufacturers.
Under the MMA, seniors who sign up for the card
will see savings of 11 to 18 percent on name brand drugs, 37 percent to
65 percent on generic drugs and up to 40 percent on mail order
purchases, compared to the average prices paid by all Americans.
Low-income beneficiaries with income of less than $12,569 for singles
and $16,862 for couples will also receive a credit of up to $1200 over
the next 18 months.
Medicaid is a state/federal partnership program to
provide health benefits to certain low-income children, pregnant women,
the elderly and those with disabilities. The program covers
approximately 41 million Americans and spent $276 billion in fiscal
2003.
The letter to State Medicaid Directors is available
at
http://www.cms.hhs.gov/states/letters.
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