Medicare Part D Low-Income Subsidy
Assets and Income Are Both Important in Subsidy Denials, and Access to State and Manufacturer Drug Programs Is Uneven Gao ID: GAO-08-824 September 5, 2008To help defray the cost of prescription drugs for beneficiaries with limited means, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) included the low-income subsidy (LIS) in the Part D prescription drug insurance program. To qualify for the LIS, beneficiaries must be enrolled in a Part D plan and their assets and income must be less than the thresholds established by the law. Part D is administered by the Centers for Medicare & Medicaid Services (CMS), and the Social Security Administration (SSA) administers the eligibility determination for the LIS. The MMA directed GAO to compare the utilization of and access to Part D prescription drugs among beneficiaries who received the LIS with those who were denied it because of the amount of their assets. This report focuses on beneficiaries' access to prescription drugs by examining (1) the importance of assets and income in LIS denials in 2006 and 2007, and (2) state and manufacturer programs providing access to prescription drugs for Medicare beneficiaries. To do this, GAO analyzed data from SSA, reviewed information on state and drug manufacturer pharmaceutical programs, and interviewed officials from SSA, CMS, state programs, advocacy organizations, and pharmaceutical manufacturer programs.
In 2006 and 2007, assets and income were both important factors in LIS denials, but income was of greater importance. In 2006, 4.5 million beneficiaries applied for the LIS and more than half were denied the subsidy. About half of LIS denials in 2006 were based solely or in part on applicants' assets exceeding program thresholds, and in 2007, about 30 percent of LIS denials were for this reason. By contrast, 66.2 percent of denials were due at least in part to income in 2006 and 81.2 percent in 2007. Because some applicants in both years were denied the LIS by an initial screen that only asked about assets and were not required to give information on income, it is impossible to know the number of these applicants who would also have been denied the LIS because of their income. Among those who provided detailed information about their assets, applicants denied the LIS often exceeded the asset threshold by a relatively small amount, and in both years more than one-quarter of these applicants exceeded the threshold by less than $5,000. Some states and drug manufacturers offer programs that assist low-income Medicare beneficiaries in obtaining prescription drugs, but the availability of these programs and the assistance they offer are uneven. Twenty-three states offer State Pharmaceutical Assistance Programs (SPAP), which can supplement Part D benefits. These SPAPs differ in the type and extent of assistance they offer, but they generally cover some of the beneficiaries' out-of-pocket prescription drug costs. Prescription drug manufacturers' Patient Assistance Programs (PAP) also assist low-income individuals in obtaining prescription drugs. However, not all PAPs are open to Part D beneficiaries, and the drugs provided are limited to those of the sponsoring manufacturers. CMS concurred with our report. SSA expressed appreciation that we used its analysis of applicants denied the LIS in 2006 and 2007 as the foundation for our analysis of the impact of the assets test on LIS applicants.
GAO-08-824, Medicare Part D Low-Income Subsidy: Assets and Income Are Both Important in Subsidy Denials, and Access to State and Manufacturer Drug Programs Is Uneven
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2008:
Medicare Part D Low-Income Subsidy:
Assets and Income Are Both Important in Subsidy Denials, and Access to
State and Manufacturer Drug Programs Is Uneven:
GAO-08-824:
GAO Highlights:
Highlights of GAO-08-824, a report to congressional committees.
Why GAO Did This Study:
To help defray the cost of prescription drugs for beneficiaries with
limited means, the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) included the low-income subsidy (LIS)
in the Part D prescription drug insurance program. To qualify for the
LIS, beneficiaries must be enrolled in a Part D plan and their assets
and income must be less than the thresholds established by the law.
Part D is administered by the Centers for Medicare & Medicaid Services
(CMS), and the Social Security Administration (SSA) administers the
eligibility determination for the LIS.
The MMA directed GAO to compare the utilization of and access to Part D
prescription drugs among beneficiaries who received the LIS with those
who were denied it because of the amount of their assets. This report
focuses on beneficiaries‘ access to prescription drugs by examining (1)
the importance of assets and income in LIS denials in 2006 and 2007,
and (2) state and manufacturer programs providing access to
prescription drugs for Medicare beneficiaries. To do this, GAO analyzed
data from SSA, reviewed information on state and drug manufacturer
pharmaceutical programs, and interviewed officials from SSA, CMS, state
programs, advocacy organizations, and pharmaceutical manufacturer
programs.
What GAO Found:
In 2006 and 2007, assets and income were both important factors in LIS
denials, but income was of greater importance. In 2006, 4.5 million
beneficiaries applied for the LIS and more than half were denied the
subsidy. About half of LIS denials in 2006 were based solely or in part
on applicants‘ assets exceeding program thresholds, and in 2007, about
30 percent of LIS denials were for this reason. By contrast, 66.2
percent of denials were due at least in part to income in 2006 and 81.2
percent in 2007. Because some applicants in both years were denied the
LIS by an initial screen that only asked about assets and were not
required to give information on income, it is impossible to know the
number of these applicants who would also have been denied the LIS
because of their income. Among those who provided detailed information
about their assets, applicants denied the LIS often exceeded the asset
threshold by a relatively small amount, and in both years more than one-
quarter of these applicants exceeded the threshold by less than $5,000.
Table:
Basis for Denial of the LIS for Applicants Denied Due to Assets and
Income by Percentage of Denied Applicants, 2006 and 2007:
Year: 2006;
Initial assets screening question: 22.2%;
Assets, but not income: 11.6%;
Both income and assets: 16.6%;
Income, but not assets: 49.6%;
Total: 100%;
Number of persons: 2,252,412.
Year: 2007;
Initial assets screening question: 7.1%;
Assets, but not income: 11.7%;
Both income and assets: 10.7%;
Income, but not assets: 70.5%;
Total: 100%;
Number of persons: 366,183.
Year: 2006;
Assets in part or solely: 50.4%;
Income in part or solely: 66.2%.
Year: 2007;
Assets in part or solely: 29.5%;
Income in part or solely: 81.2%.
Source: GAO analysis of SSA data.
[End of table]
Some states and drug manufacturers offer programs that assist low-
income Medicare beneficiaries in obtaining prescription drugs, but the
availability of these programs and the assistance they offer are
uneven. Twenty-three states offer State Pharmaceutical Assistance
Programs (SPAP), which can supplement Part D benefits. These SPAPs
differ in the type and extent of assistance they offer, but they
generally cover some of the beneficiaries‘ out-of-pocket prescription
drug costs. Prescription drug manufacturers‘ Patient Assistance
Programs (PAP) also assist low-income individuals in obtaining
prescription drugs. However, not all PAPs are open to Part D
beneficiaries, and the drugs provided are limited to those of the
sponsoring manufacturers.
CMS concurred with our report. SSA expressed appreciation that we used
its analysis of applicants denied the LIS in 2006 and 2007 as the
foundation for our analysis of the impact of the assets test on LIS
applicants.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-824]. For more
information, contact A. Bruce Steinwald at (202) 512-7114 or
steinwalda@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Assets and Income Were Important Factors in LIS Denials:
Some State and Drug Manufacturer Programs Help Beneficiaries, but
Provide Uneven Access to Prescription Drugs:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendix I: Social Security Administration Application for the Low-
Income Subsidy, 2008:
Appendix II: Comments from the Centers for Medicare & Medicaid
Services:
Appendix III: Comments from the Social Security Administration:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: LIS Benefits by Beneficiary Group, 2008:
Table 2: Qualified SPAPs Serving Broadly Defined Populations: Coverage
for Medicare Beneficiaries, 2007:
Figures:
Figure 1: Plan and Beneficiary Payments under Part D Prescription Drug
Standard Benefit, 2008:
Figure 2: Low-Income Subsidy Application Paths:
Figure 3: Basis for Denial of the LIS for Applicants Denied Due to
Assets and Income, 2006 and 2007:
Figure 4: Percentage of Applicants Who Exceeded the Assets Threshold,
by Amount over the Threshold, 2006 and 2007:
Figure 5: Geographic Distribution of SPAPs, 2007:
Figure 6: Income Eligibility Requirements as a Percentage of the
Federal Poverty Level for SPAPs That Assist Broadly Defined
Populations, 2007:
Abbreviations:
CMS: Centers for Medicare & Medicaid Services:
FPL: federal poverty level:
HHS: Department of Health and Human Services:
LIS: low-income subsidy:
MMA: Medicare Prescription Drug, Improvement, and Modernization Act of
2003:
OIG: Office of Inspector General:
PACE: Pharmaceutical Assistance Contract for the Elderly:
PAP: patient assistance program:
PDP: prescription drug plan:
SPAP: state pharmaceutical assistance program:
SSA: Social Security Administration:
SSI: supplemental security income:
TrOOP: true out-of-pocket:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 5, 2008:
Congressional Committees:
The Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) created a voluntary outpatient prescription drug insurance
program, known as Medicare Part D, that provides prescription drug
coverage for over 25 million beneficiaries--seniors and individuals
with disabilities--enrolled in the program.[Footnote 1] Under this
program, which began in January 2006, Medicare beneficiaries can enroll
in prescription drug plans run by private companies that contract with
the Centers for Medicare & Medicaid Services (CMS), the agency in the
Department of Health and Human Services (HHS) that administers the
Medicare program.[Footnote 2] The Part D program shares the cost of
these drug plans with enrollees.
To help further defray the costs of prescription drugs for
beneficiaries with limited financial means, the MMA included a
provision for a low-income subsidy (LIS). Through the LIS, Medicare
assists these beneficiaries with their out-of-pocket prescription drug
expenses, with the amount of assistance depending on beneficiaries'
income and assets.[Footnote 3] To qualify for the LIS, applicants must
meet two conditions: (1) their income and assets must be less than the
thresholds established by the MMA; and (2) they must be enrolled in a
Part D plan.[Footnote 4] (For 2008, the income threshold for the LIS is
$15,600 for individuals and $21,000 for couples; the asset threshold is
$11,990 for individuals and $23,970 for couples.)[Footnote 5] The
Social Security Administration (SSA) administers the LIS eligibility-
determination process, notifying CMS whether an individual applicant
has been approved for the LIS or denied it.[Footnote 6] In addition to
the Part D LIS, some state and drug manufacturer programs provide
prescription drug assistance to Medicare beneficiaries with low
incomes.
Prior to the enactment of the MMA, there was considerable discussion
among policymakers about the appropriateness of using an asset test (in
addition to an income test) to determine eligibility for the LIS. Some
contended that an income test alone was sufficient to identify those
who needed the LIS and that an asset test would prevent seniors who
needed assistance from qualifying for it. Following these discussions,
the MMA directed us to compare the utilization of and access to Part D
drugs among beneficiaries who received the LIS with those denied it
because of the amount of their assets.[Footnote 7] We will address this
mandate in two reports. This report focuses on Medicare beneficiaries'
access to prescription drugs by examining: (1) the importance of assets
and income in LIS denials in 2006 and 2007; and (2) state and drug
manufacturer programs providing access to prescription drugs for
Medicare beneficiaries. We will issue a second report comparing the
prescription drug utilization of those who received the LIS with those
who were denied it because of their assets.
Our analysis is limited to LIS applicants; individuals deemed eligible
for the LIS--dual eligibles and supplemental security income (SSI)
recipients--are not within our scope because they do not have to apply
for it.[Footnote 8] To examine the impact of the asset test on LIS
applicants, we reviewed SSA documentation and examined SSA's analyses
of applicants who were denied the LIS. We did not independently examine
SSA's data, but SSA checked applicant information against its own and
other federal databases. We therefore determined that these data are
sufficiently reliable for our purposes.
To examine potential access to other sources of assistance with
prescription drug costs, we reviewed literature on state programs and
the requirements of these programs. We also examined CMS information on
programs established by states and pharmaceutical manufacturers to
assist individuals in obtaining drugs. We interviewed state program
officials and representatives of pharmaceutical manufacturer programs.
We conducted this performance audit from August 2007 through July 2008
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
Assets and income were both important factors in LIS denials in 2006
and 2007, but assets were less important than income. In 2006, half of
all denials were due at least in part to assets, and nearly two-thirds
were due to income, while in 2007 about 30 percent were at least in
part due to assets and over 80 percent were due to income. Because all
LIS applicants who were denied the LIS on the basis of an assets
screening question were not required to answer questions about their
income, it is not possible to know the number of these individuals who
would also have failed to qualify for the LIS because of their income.
Beneficiaries denied the LIS who answered the detailed questions about
assets often exceeded the asset threshold by a relatively small amount.
For example, over one-quarter of these applicants exceeded the asset
threshold by less than $5,000 in both 2006 and 2007. Overall, more than
one-half of the 4.5 million applicants for the LIS were denied the
subsidy in calendar year 2006 and about 56 percent were denied it in
fiscal year 2007.[Footnote 9]
States and drug manufacturers offer other programs that assist some low-
income Medicare beneficiaries in obtaining prescription drugs, but
these programs provide uneven national access to drugs. Less than half
the states offer State Prescription Assistance Programs (SPAP), which
can supplement Part D benefits. These SPAPs differ in the type and
extent of assistance they offer, but they generally cover some or all
of the beneficiary's out-of-pocket prescription drug costs. All broadly
defined SPAPs require beneficiaries to pass an income test, but only
one also has an asset test. Prescription drug manufacturers' Patient
Assistance Programs (PAP) also assist low-income individuals in
obtaining prescription drugs. However, not all PAPs are available to
Part D beneficiaries, and the drugs provided are limited to those of
the sponsoring manufacturers.
We provided a draft of this report to CMS and SSA. CMS concurred with
our report and its concluding observations. SSA expressed appreciation
that we used its analysis of applicants denied the LIS in 2006 and 2007
as the foundation for our analysis of the impact of the asset test on
LIS applicants. CMS' written comments appear in appendix II. SSA's
written comments appear in appendix III.
Background:
All Medicare beneficiaries who have either Part A or Part B coverage
and reside in the United States (the 50 states and the District of
Columbia) can obtain Part D coverage.[Footnote 10] Under Part D, both
the beneficiary and the plan pay a portion of the cost of covered
prescription drugs. In general, beneficiaries are responsible for
paying monthly premiums, an annual deductible, and copayments. For
2008, under the standard benefit, beneficiaries pay a deductible of
$275 as well as 25 percent of the cost of their prescription drugs up
to the initial coverage limit of $2,510 (which includes expenditures by
both the plan and the beneficiary).[Footnote 11] Beneficiaries then
enter the coverage gap (also called the doughnut hole) where they pay
the entire cost of their prescription drugs. The annual catastrophic
threshold is $5,726.25. At this point, the beneficiary's "true out-of-
pocket" (TrOOP) payment has amounted to $4,050 with the remainder
($1,676.25) paid by the plan. After reaching the annual catastrophic
threshold, the beneficiary is responsible for only modest cost sharing:
the higher of 5 percent of the prescription drug's cost or $2.25 for a
generic drug and $5.60 for a brand name drug.[Footnote 12] (See figure
1.)
Figure 1: Plan and Beneficiary Payments under Part D Prescription Drug
Standard Benefit, 2008:
[See PDF for image]
This figure is an illustration of Plan and Beneficiary Payments under
Part D Prescription Drug Standard Benefit, 2008, as follows:
Year-to-date drug costs (in dollars): 0-$275 (deductible);
Percent paid by beneficiary: 100%:
* Plan payment: 0;
* Beneficiary payment: 100%.
Year-to-date drug costs (in dollars): $275-$2,510 (initial coverage
limit);
Percent paid by beneficiary: 100%:
* Plan payment: 75%;
* Beneficiary payment: 25%.
Year-to-date drug costs (in dollars): $2,510-$5,725 (catastrophic
threshold);
Percent paid by beneficiary: 100%:
* Plan payment: 0;
* Beneficiary payment: 100% (coverage gap).
Year-to-date drug costs (in dollars): $5,725 through catastrophic
coverage;
Percent paid by beneficiary: 100%;
* Plan payment: 95%;
* Beneficiary payment: 5%.
Source: GAO analysis of CMS information.
Note: The standard benefit in 2008 includes a $275 deductible, after
which beneficiaries pay 25 percent of their total drug costs up to an
initial limit of $2,510. This is followed by a coverage gap in which
beneficiaries pay the entire cost of their drugs until they have spent
a total of $4,050 out of pocket for their drug costs. From that point
on, beneficiaries pay 5 percent of a drug's actual cost or $2.25 for a
generic drug or $5.60 for a brand name drug, whichever is greater.
Beneficiary payments may differ for plans that choose to offer
alternative coverage that is actuarially equivalent to the standard
benefit.
[End of figure]
The Low-Income Subsidy (LIS):
When Congress passed Part D, it also provided the LIS, an additional
subsidy for beneficiaries with limited assets and income to help them
pay their portion of out-of-pocket costs. Most Medicare beneficiaries
who receive the LIS are "deemed"--that is, they qualify for the subsidy
automatically on the basis of being Medicaid or Supplemental Security
Income (SSI) recipients, or because they are enrolled in certain
Medicare Savings Programs.[Footnote 13] Those beneficiaries who are not
deemed must apply for the LIS and show that their assets and income are
below specified limits. As of January 2008, CMS data showed that 9.38
million beneficiaries were receiving the LIS, of whom 7.85 million had
been deemed and 1.53 million had applied for the subsidy. CMS estimated
that there were 2.6 million beneficiaries who were eligible for the LIS
but not receiving it.
The amount of assistance provided to LIS recipients is also determined
by their income and assets. All LIS recipients are entitled to a
premium subsidy that is based on their income.[Footnote 14] For
recipients of the LIS who had to apply for it, the premium subsidy is
100 percent for individuals or couples whose income is less than 135
percent of the federal poverty level (FPL). It varies by income for
such recipients whose income is less than 150 percent of the FPL but
greater than or equal to 135 percent of the FPL[Footnote 15]. LIS
recipients eligible for a full premium subsidy pay no premium if they
enroll in a Part D plan offering basic prescription drug coverage with
a premium less than or equal to the benchmark premium for their area.
[Footnote 16] They also can choose to enroll in a plan with a premium
higher than the benchmark premium and pay the difference between the
two. Similarly, LIS recipients entitled to a partial premium subsidy
pay the difference between their plan's premium and the percentage of
the plan's premium subsidy amount determined by their income level.
(See table 1.)
Table 1: LIS Benefits by Beneficiary Group, 2008:
Annual income (percentage of the federal poverty level [FPL]): Below
135 percent[A];
Assets: Individuals: Below $7,790[B]; Couples: Below $12,440[B];
Premium: $0[C];
Annual deductible: $0;
Beneficiary pays for each prescription: During initial coverage period:
$2.25/generic; $5.60/brand-name;
Beneficiary pays for each prescription: In coverage gap: $2.25/generic;
$5.60/brand-name;
Beneficiary pays for each prescription: After coverage gap: $0.
Annual income (percentage of the federal poverty level [FPL]): Below
135 percent[A];
Assets: Individuals: Between $7,790 and $11,990[B]; Couples: Between
$12,440 and $23,970[B];
Premium: $0[C];
Annual deductible: $56;
Beneficiary pays for each prescription: During initial coverage period:
15% coinsurance;
Beneficiary pays for each prescription: In coverage gap: 15%
coinsurance;
Beneficiary pays for each prescription: After coverage gap:
$2.25/generic; $5.60/brand name.
Annual income (percentage of the federal poverty level [FPL]): Greater
than or equal to 135 percent[A] and less than 150 percent[A];
Assets: Individuals: Below $11,990[B]; Couples: Below $23,970[B];
Premium: Varies by income level[D];
Annual deductible: $56;
Beneficiary pays for each prescription: During initial coverage period:
15% coinsurance;
Beneficiary pays for each prescription: In coverage gap: 15%
coinsurance;
Beneficiary pays for each prescription: After coverage gap:
$2.25/generic; $5.60/brand name.
Source: GAO analysis of CMS regulations and guidance.
Notes: This table describes the assistance that is provided to LIS
recipients who applied and qualified for the LIS.
[A] In 2008, 135 percent of the FPL is $14,040 for individuals and
$18,900 for couples, and 150 percent of the FPL is $15,600 for
individuals and $21,000 for couples. These income limits are those that
apply to individuals with no dependents. If household members rely on
the Medicare beneficiary or the spouse of the beneficiary for support,
SSA uses the federal poverty levels based on household size. Also, if
an applicant lives in Alaska or Hawaii, SSA applies the slightly higher
poverty levels applicable to those states.
[B] Asset limits are reduced by $1,500 for individuals or $3,000 for
couples if beneficiaries do not intend to use any of their assets for
funeral or burial expenses.
[C] Assumes that beneficiaries are enrolled in a Part D plan with a
premium less than or equal to the benchmark premium for their area. The
benchmark premium for each region is based on a weighted average of the
premiums for basic prescription drug coverage charged by the Part D
plans available in the region. A beneficiary also can choose to enroll
in a plan with a premium higher than the benchmark premium and pay the
difference between the two.
[D] Beneficiaries pay an amount equal to the plan's premium less the
premium subsidy to which they are entitled based on their income. The
subsidy is 100 percent of the plan's premium subsidy amount if a
beneficiary's income is at or below 135 percent of the applicable FPL,
75 percent if it is greater than 135 percent but less than or equal to
140 percent of the FPL, 50 percent if it is greater than 140 percent
but less than or equal to 145 percent of the FPL, and 25 percent if it
is greater than 145 percent and less than 150 percent of the FPL. Part
D plans are offered in 34 designated regions made up of single states
or groups of states. The premium subsidy amount for a regional Part D
plan is equal to the lesser of the following two amounts: (1) in the
case of a plan other than a Medicare Advantage drug plan, the plan's
monthly Part D premium for basic prescription drug coverage or the
portion of the premium attributable to such coverage for a plan that
has enhanced alternative coverage or the Medicare Advantage monthly
prescription drug premium for those in a Medicare Advantage plan, or
(2) the greater of the low-income benchmark premium amount for a PDP
region or the lowest premium for a prescription drug plan that offers
basic prescription drug coverage in the PDP region.
[End of table]
Recipients of the LIS pay a small deductible or none at all and are not
subject to the coverage gap--they pay the same copayment or coinsurance
for each prescription until their total expenditures reach the
catastrophic threshold ($5,726 in 2008). Those with incomes less than
135 percent of the FPL and assets less than $7,790 in 2008 for
individuals, or $12,440 for couples, pay no deductible. They pay a flat
amount for each prescription until their spending reaches the annual
catastrophic threshold, after which they pay nothing. Other LIS
recipients pay a deductible not exceeding $56. They pay 15 percent
coinsurance for each prescription or the plan's copayment, whichever is
less, until their spending reaches the annual catastrophic threshold.
From there on, they pay $2.25 for a generic drug and $5.60 for a brand
name drug.
Applying for the LIS:
Beneficiaries generally apply to SSA for the LIS.[Footnote 17] The
application can be completed by the applicant, completed with the
assistance of SSA staff in person or by phone, or completed on the
Internet.[Footnote 18] Applicants are asked an initial screening
question about their assets (Question 3 on the application, see fig.
2): whether their savings, investments, and real estate (other than
their home) are worth more than $11,990, or, if married and living with
their spouse, whether their combined assets are worth more than
$23,970.[Footnote 19] If applicants check "YES," they are denied the
LIS; if they check "NO or NOT SURE," they are asked a series of
detailed questions about their assets and income.[Footnote 20] The
questions about assets cover: (1) bank accounts (checking, savings, and
certificates of deposit); (2) stocks, bonds, savings bonds, mutual
funds, Individual Retirement Accounts, and other investments; (3) any
other cash; (4) life insurance policies with a total face value greater
than $1,500; and (5) real estate other than the applicant's home.
Applicants are also asked if they plan to use any of their assets for
funeral expenses and, if they answer yes, $1,500 of their assets are
disregarded ($3,000 for couples). The detailed questions about income
cover: (1) Social Security benefits; (2) railroad retirement; (3)
veterans' benefits; (4) other pensions and annuities; (5) other income
including alimony, net rental income, and workers' compensation; and
(6) assistance with household expenses from anyone (for example, from a
relative or friend). Applicants are approved for the LIS only if both
their assets and incomes are less than the thresholds established by
law. Because some applicants were denied the LIS based on their
checking the "YES" box on the initial screening question about assets
and were not required to answer questions about their income, we cannot
know how many of these applicants would have also failed to qualify for
the LIS on the basis of their income. Further, it is not known how many
applicants may have been dissuaded from submitting an application due
to the detailed nature of the information they must provide about their
income and assets.
Figure 2: Low-Income Subsidy Application Paths:
[See PDF for image]
This figure is an illustration of low-income subsidy application paths,
as follows:
Applied for LIS:
Initial assets screen:
If you are married and living with your spouse, do you have savings,
investments or real estate worth more than $23,970? If not married or
you don't live with your spouse, do you have savings, investments or
real estate worth more than $11,990? Do not include the home you live
in, vehicles, personal possessions, burial plots or irrevocable burial
contracts.
In you placed an "X" in the yes box, stop. You are not eligible for the
extra help and you do not need to return this application to us. If you
need a letter stating you are not eligible, sing the application on
page 6 and return in to us. Assets are above the threshold: denied.
If you placed an "X" in the no or not sure box, complete the erst of
the application and return it to us.
Itemized assets and income are compared to thresholds:
Assets above the threshold, but income below the threshold: denied.
Income above the threshold, but assets below the threshold: denied.
Both income and assets above the threshold: denied.
Both income and assets below threshold: approved.
Source: GAO analysis of SSA information.
[End of figure]
SSA does not rely solely on the information on the application, but
also checks its own databases and those of other agencies, including
the Internal Revenue Service. If it identifies discrepancies between
the information on the application and in the databases, SSA may
request additional information from an applicant.
Assets and Income Were Important Factors in LIS Denials:
Both assets and income were important factors in LIS denials, but more
applicants were denied the subsidy because their income was too high
than were denied it because their assets were too high. However,
because some applicants were denied the LIS based solely on the initial
assets screening question, and were not required to answer questions
about their income, it is not possible to know how many of these
applicants would have also been denied the LIS because of their income.
In both 2006 and 2007, of those beneficiaries who were denied the LIS
and who answered detailed questions about their assets, more than one
in four exceeded the assets threshold by less than $5,000. Overall,
more than half of the applicants for the subsidy in 2006 were denied it
in calendar year 2006 and about 56 percent were denied it in fiscal
year 2007.
Assets Were Less Important as Basis for Denial Than Income in Both 2006
and 2007:
In 2006 and 2007, assets and income were both an important basis for
denying the LIS, but income accounted for a larger number of denials in
both years. In 2006, 50.4 percent of all denials were due at least in
part to assets; by contrast, 66.2 percent were based at least in part
on income. (See figure 3.) In 2006, 22.2 percent of LIS denials
resulted from the answer to the initial screening question, which asked
about assets. Because these applicants were not required to answer
questions about income, it is impossible to know how many of them would
also have been denied the LIS because of their income. However, a
minimum of 11.6 percent of 2006 denials were due entirely to assets. In
2007, the difference between income-based denials and asset-based
denials increased: 29.5 percent of denials were due at least in part to
assets, while 81.2 percent were due at least in part to income.
Overall, more than half of the 4.5 million applicants for the subsidy
in 2006 were denied it in calendar year 2006 and about 56 percent were
denied it in fiscal year 2007.
Figure 3: Basis for Denial of the LIS for Applicants Denied Due to
Assets and Income by Percentage of Denied Applicants, 2006 and 2007:
[See PDF for image]
Year: 2006;
Initial assets screening question[A]: 22.2%;
Assets, but not income: 11.6%;
Both income and assets: 16.6%;
Income, but not assets: 49.6%;
Total: 100%;
Number of persons: 2,252,412.
Year: 2007;
Initial assets screening question[A]: 7.1%;
Assets, but not income: 11.7%;
Both income and assets: 10.7%;
Income, but not assets: 70.5%;
Total: 100%;
Number of persons: 366,183.
Year: 2006;
Assets in part or solely: 50.4%;
Income in part or solely: 66.2%.
Year: 2007;
Assets in part or solely: 29.5%;
Income in part or solely: 81.2%.
Source: GAO analysis of SSA data.
Notes: For 2006, this table excludes 233,728 applicants (9.4 percent of
denials) who were denied the LIS because they were not Medicare
beneficiaries, not U.S. residents, or failed to cooperate (meaning that
they did not follow up with SSA by submitting necessary documentation).
In 2007, 50,310 applicants (12.1 percent of denials) were excluded for
these reasons. In addition, the data for 2007 include some applicants
who applied for the LIS in the last quarter of 2007 and whose
applications were held over into January 2008 for determination of
whether they were eligible to receive the LIS in 2008.
[A] When the response to the initial screening question about assets
(Question 3 on the application) indicates assets greater than the
threshold, the applicant does not need to provide income information.
[End of figure]
Denials Often Exceeded Asset Threshold by Relatively Small Amount:
In both 2006 and 2007, a number of applicants who were denied the LIS
in part because of their assets, and who reported the actual amount of
their assets, exceeded the threshold by a relatively small amount. For
example, in 2006, 3.6 percent of these denials exceeded the asset
threshold by less than $500; 10.4 percent exceeded the threshold by
less than $1,500; and 26.0 percent exceeded the threshold by less than
$5,000. (See fig. 4.) In 2007, the pattern was similar: 5.0 percent
exceeded the asset threshold by less than $500, 12.4 percent by less
than $1,500, and 26.9 percent by less than $5,000.
Figure 4: Percentage of Applicants Who Exceeded the Assets Threshold,
by Amount over the Threshold, 2006 and 2007:
[See PDF for image]
This figure is a multiple vertical bar graph depicting the following
data:
Assets over the threshold: less than $500;
Year: 2006: 3.6%;
Year: 2007: 5%.
Assets over the threshold: $500 to less than $1,000;
Year: 2006: 3.6%;
Year: 2007: 4.1%.
Assets over the threshold: $1,000 to less than $1,500;
Year: 2006: 3.2%;
Year: 2007: 3.3%.
Assets over the threshold: $1,500 to less than $3,000;
Year: 2006: 7.6%;
Year: 2007: 6.9%.
Assets over the threshold: $3,000 to less than $5,000;
Year: 2006: 8%;
Year: 2007: 7.6%.
Assets over the threshold: $5,000 to less than $10,000;
Year: 2006: 13.7%;
Year: 2007: 12.5%.
Assets over the threshold: $10,000 to less than $20,000;
Year: 2006: 18.6%;
Year: 2007: 17.7%.
Assets over the threshold: $20,000 to less than $30,000;
Year: 2006: 10.1%;
Year: 2007: 9.3%.
Assets over the threshold: $30,000 to less than $40,000;
Year: 2006: 6.8%;
Year: 2007: 6.8%.
Assets over the threshold: $40,000 to less than $50,000;
Year: 2006: 4.8%;
Year: 2007: 4.4%.
Assets over the threshold: $50,000 or more;
Year: 2006: 20%;
Year: 2007: 22.4%.
Source: GAO analysis of SSA data.
[End of figure]
Some State and Drug Manufacturer Programs Help Beneficiaries, but
Provide Uneven Access to Prescription Drugs:
Some state and drug manufacturer programs provide assistance to
Medicare beneficiaries with limited income in obtaining drugs, but they
do not provide uniform national access to prescription drugs. State
Pharmaceutical Assistance Programs (SPAP) can fill gaps in low-income
individuals' Part D coverage, but less than half of the states have
SPAPs. The eligibility requirements for these programs vary, as does
the type and extent of assistance provided. Pharmaceutical
manufacturers sponsor Patient Assistance Programs (PAP) that provide
assistance to low-income individuals, but not all are open to Medicare
beneficiaries, and the drugs they provide are limited to those produced
by the sponsor.
SPAPs Offer Assistance to Medicare Beneficiaries with Limited Incomes,
but Access Is Uneven:
SPAPs offer financial assistance to low-income Medicare beneficiaries-
-those who receive the LIS and those who do not--in obtaining
prescription drugs, but these programs are available in only a minority
of states. Under the MMA, SPAPs--which generally predate Part D--can
offer wrap-around benefits that fill in gaps in Part D and cover some
or all of the beneficiary's out-of-pocket expenditures. To qualify as
an SPAP under Part D, the program must coordinate payments and payment
processing with the Part D plans in which their beneficiaries are
enrolled.[Footnote 21] Expenses paid by a qualified SPAP are counted
toward the enrolled beneficiary's TrOOP costs.
Fewer than half of all states have SPAPs that are open to enrollment by
low-income Medicare beneficiaries.[Footnote 22] As of October 2007, 23
states offered 37 qualified SPAPs to assist Medicare beneficiaries in
paying their Part D costs. (See fig. 5.) Twenty of the 37 programs
serve broadly defined populations. Broadly defined SPAPs require
applicants to be state residents and meet eligibility requirements with
respect to age and financial resources, but do not require an applicant
to have been diagnosed with a specific disease or condition. Fourteen
of the remaining programs assist special populations of individuals who
have specific diseases or conditions, such as HIV-AIDS.[Footnote 23]
Figure 5: Geographic Distribution of SPAPs, 2007:
[See PDF for image]
This figure is a map of the United States depicting the geographic
distribution of SPAPs in 2007 in four categories as follows:
States with SPAPs that assist a broadly defined population:
Connecticut:
Illinois:
Indiana:
Maine:
Massachusetts:
Missouri:
Montana:
New Jersey:
New York:
Rhode Island:
South Carolina:
Vermont:
States with SPAPs that assist individuals with particular diseases or
conditions:
Colorado:
Texas:
Virginia:
States with both types of SPAPs:
Delaware:
Maryland:
Nevada:
North Carolina[A]:
Pennsylvania:
Wisconsin:
States without an SPAP:
Alabama:
Alaska:
Arizona:
Arkansas:
California:
District of Columbia:
Florida:
Georgia:
Hawaii:
Idaho:
Iowa:
Kansas:
Kentucky:
Louisiana:
Michigan:
Minnesota:
Mississippi:
Nebraska:
New Hampshire:
New Mexico:
North Dakota:
Ohio:
Oklahoma:
Oregon:
South Dakota:
Tennessee:
Utah:
Washington:
West Virginia:
Wyoming:
[A] State with an SPAP that requires an asset test.
Source: GAO analysis of data from CMS, National Pharmaceutical Council,
and SPAPs; Map Resources (map).
[End of figure]
States establish their own eligibility standards for SPAPs. All 20
SPAPs that serve a broadly defined population have an income test, but
only one, North Carolina's,[Footnote 24] has an asset test. All but one
of these programs, Pennsylvania's Pharmaceutical Assistance Contract
for the Elderly (PACE), have income limits that exceed the LIS income
threshold, which is less than 150 percent of the FPL. (See fig. 6.)
Most SPAPs have income limits set at or above 200 percent of the FPL,
and three have limits that exceed 300 percent of the FPL. In four
cases, the income limits are set so that benefits are graduated--
enrollees with higher incomes receive less assistance that those with
lower incomes.
Figure 6: Income Eligibility Requirements as a Percentage of the
Federal Poverty Level for SPAPs That Assist Broadly Defined
Populations, 2007:
[See PDF for image]
This figure is a a vertical bar graph depicting the following data:
LIS income limit for partial coverage is 150% of FPL.
State with qualified SPAPs: Massachusetts;
Percentage of FPL: 500%.
State with qualified SPAPs: Rhode Island;
Percentage of FPL: 403%.
State with qualified SPAPs: New York;
Percentage of FPL: 343%.
State with qualified SPAPs: Maryland;
Percentage of FPL: 300%.
State with qualified SPAPs: Wisconsin;
Percentage of FPL: 240%.
State with qualified SPAPs: Nevada;
Percentage of FPL: 236%.
State with qualified SPAPs: Pennsylvania (PACENET);
Percentage of FPL: 230%.
State with qualified SPAPs: Pennsylvania (PACE);
Percentage of FPL: 142%.
State with qualified SPAPs: Connecticut;
Percentage of FPL: 226%.
State with qualified SPAPs: Vermont;
Percentage of FPL: 225%.
State with qualified SPAPs: Illinois;
Percentage of FPL: 223%.
State with qualified SPAPs: New Jersey (PAAD);
Percentage of FPL: 221%.
State with qualified SPAPs: New Jersey (Senior Gold);
Percentage of FPL: 319%.
State with qualified SPAPs: Delaware;
Percentage of FPL: 200%.
State with qualified SPAPs: Missouri;
Percentage of FPL: 200%.
State with qualified SPAPs: Montana;
Percentage of FPL: 200.
State with qualified SPAPs: South Carolina;
Percentage of FPL: 198%.
State with qualified SPAPs: Maine;
Percentage of FPL: 185%.
State with qualified SPAPs: North Carolina;
Percentage of FPL: 175%.
State with qualified SPAPs: Indiana;
Percentage of FPL: 152%.
Source: GAO analysis of data from CMS, National Pharmaceutical Council,
and SPAPs.
Notes: In all cases, the figure shows the highest income limit for a
single person in each SPAP. In four SPAPs, benefits are graduated so
that persons with relatively higher incomes receive a smaller benefit
than those with lower incomes.
Income requirements are for individuals. For SPAPs that have different
income limits for different categories of individuals (for example,
aged and disabled), the highest income limit is shown.
[End of figure]
Many SPAPs also require Medicare beneficiaries to apply for the LIS. As
of October 2007, over half of the 20 SPAPs that serve broadly defined
populations required applicants who were potentially eligible for the
LIS to apply for it in conjunction with applying for assistance from
the state. By identifying individuals eligible for the LIS, the cost to
the state is reduced because Medicare pays for some prescription drug
costs that would otherwise be paid by the SPAP.
The assistance that broadly defined SPAPs provide to Part D enrollees
is uneven and varies in three ways: (1) the types of Part D costs for
which SPAPs may provide financial assistance; (2) the amount of
financial assistance they provide in each case; and (3) the drugs they
pay for that are not otherwise covered by a Part D plan. Part D costs
for which SPAPs may provide assistance include monthly plan premiums,
the annual deductible, and copayments (in the initial coverage period
and in the coverage gap).[Footnote 25] While 8 of the 20 SPAPs that
assist broadly defined populations provide some assistance for all four
types of Part D costs, the others assist Part D enrollees with one or
more of these costs. (See table 2.)
Broadly defined SPAPs differ in the amount of assistance they provide
for Part D premiums, deductibles, and copayments. Eleven of the 20
qualified SPAPs that serve a broadly defined population cover the full
Part D premium for at least some enrollees,[Footnote 26] and 6 SPAPs
offer no assistance with the premium. Programs also vary in the portion
of the copayment they pay in both the initial coverage period and in
the coverage gap.
Table 2: Qualified SPAPs Serving Broadly Defined Populations: Coverage
for Medicare Beneficiaries, 2007:
State: Connecticut;
Premiums: Full Payment;
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Delaware;
Premiums: Full Payment;
Deductibles: Partial Payment;
Co-pay: No Payment;
During Part D Coverage Gap: Partial Payment.
State: Illinois;
Premiums: Full Payment[A];
Deductibles: Full Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Indiana;
Premiums: Full Payment[A];
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: No Payment.
State: Maine;
Premiums: Full Payment[A];
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Maryland;
Premiums: Partial Payment;
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: No Payment.
State: Massachusetts[B];
Premiums: Full Payment[A];
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Missouri;
Premiums: No Payment;
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Montana;
Premiums: Full Payment[A];
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: No Payment.
State: Nevada;
Premiums: Full Payment[A];
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: Full Payment.
State: New Jersey (PAAD);
Premiums: Full Payment[A];
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: New Jersey (Senior Gold);
Premiums: No Payment;
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: New York;
Premiums: Full Payment[A];
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: North Carolina;
Premiums: Partial Payment;
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: ô.
State: Pennsylvania (PACE);
Premiums: Full Payment;
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Pennsylvania (PACENET);
Premiums: No Payment;
Deductibles: Partial Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
State: Rhode Island[B];
Premiums: No Payment;
Deductibles: Partial Payment;
Co-pay: No Payment;
During Part D Coverage Gap: Partial Payment.
State: South Carolina;
Premiums: No Payment;
Deductibles: No Payment;
Co-pay: No Payment;
During Part D Coverage Gap: Partial Payment.
State: Vermont[B];
Premiums: Partial Payment;
Deductibles: Full Payment;
Co-pay: Full Payment;
During Part D Coverage Gap: Full Payment.
State: Wisconsin[B];
Premiums: No Payment;
Deductibles: Full Payment;
Co-pay: Partial Payment;
During Part D Coverage Gap: Partial Payment.
Source: GAO analysis of CMS and National Pharmaceutical Council data.
Legend:
Full Payment--SPAP pays all of this expense for qualifying individuals,
resulting in zero out-of-pocket expenses for a beneficiary.
Partial Payment--SPAP pays a portion of this expense for qualifying
individuals, resulting in some out-of-pocket expenses for a
beneficiary.
No Payment--SPAP does not cover this expense, resulting in 100 percent
out-of-pocket expense for a beneficiary.
Notes: The data are from CMS's list of Qualified State Pharmaceutical
Assistance Programs under the MMA (available at [hyperlink,
http://www.cms.hhs.gov/States/07_SPAPs.asp#TopOfPage], downloaded Oct.
15, 2007) and the National Pharmaceutical Council's Pharmaceutical
Benefits Under State Medical Assistance Programs, 2007 (Reston, Va.,
2007).
SPAP qualification criteria may include meeting an income threshold or
enrolling in designated prescription drug programs.
[A] The SPAP pays the premium for any plan with a premium less than or
equal to the benchmark premium. Part D plans are offered in 34
designated regions made up of single states or groups of states. The
benchmark premium for each region is calculated annually based on a
weighted average of the premiums charged by the Part D plans available
in the region.
[B] The SPAP provides a graduated benefit based on a beneficiary's
income level.
[End of table]
In addition to assistance with Medicare Part D drug costs, many SPAPs
pay for classes of drugs not covered by Medicare Part D. Some programs
also pay for drugs not covered by a particular Part D plan (often
referred to as nonformulary drugs).[Footnote 27]
Manufacturers' Patient Assistance Programs Help Some Low-income
Medicare Beneficiaries, but Program Features Vary:
Pharmaceutical manufacturers provide prescription drug assistance to
some low-income individuals, including Part D beneficiaries, through
Patient Assistance Programs (PAP).[Footnote 28] These programs, which
are operated by the manufacturer or an independent charitable
organization, provide prescription drugs free or at a reduced price.
Individual program features, including the application process,
eligibility requirements, and drugs offered, vary. PAPs typically
assist individuals who have chronic illnesses and high drug costs.
Unlike SPAPs, these programs are national in scope. However, the drugs
they provide are limited to those produced by the sponsoring
manufacturer and some manufacturers may not make all their drugs
available.[Footnote 29]
PAPs typically require beneficiaries to demonstrate financial need, be
residents or citizens of the United States, and have no prescription
drug insurance coverage other than Part D. An applicant's income
usually must fall below 200 percent of the FPL to qualify for
assistance,[Footnote 30] although some PAPs have higher limits. Many
PAPs, however, do not publish their income eligibility standards. In
the case of financial hardship, some PAPs evaluate individuals on a
case by case basis.
PAPs generally operate outside of Part D, meaning that beneficiaries
can obtain prescription drugs without using their Part D insurance
benefit.[Footnote 31] Drugs provided to Medicare beneficiaries by PAPs
operating outside of Part D do not count against TrOOP costs, but
nominal copayments charged by some programs may. Part D plans use data
from the PAPs to ensure that drugs the programs provide beneficiaries
do not count against their TrOOP and to enable Part D plans to address
safety concerns associated with prescription drugs provided outside of
Part D. CMS maintains a Web site that provides information on drugs
available to Medicare beneficiaries through 47 PAPs, including PAPs
representing 9 of the 10 largest pharmaceutical companies.
The process for accessing PAPs and their drugs varies considerably.
Many PAPs make application forms available on the Internet, while
others require that applications be requested by phone, and some PAPs
may screen for eligibility before sending out an application. Some PAPs
that offer more than one product allow applicants to receive more than
one drug at a time, whereas others have separate applications for each
drug.
The degree of physician involvement in the application process also
varies across PAPs. Patients often learn about the programs from a
physician and, in many cases, a physician or patient advocate completes
the application on behalf of the patient. In other cases, the patient
can complete and submit the application, but the physician's signature
is required.
Individuals typically receive a 30-day to 180-day supply of drugs after
their applications are approved. The drugs are generally sent to a
clinic or doctor's office, although some PAPs mail drugs directly to
the individuals or give them a voucher that can be redeemed at a
pharmacy. The number of refills allowed also varies, with some PAPs
requiring individuals to submit a new application for each refill.
Concluding Observations:
We have shown that in 2006 and 2007 income was a more important factor
in LIS denials than assets, but both were important. Whether or not
there should be an asset test in addition to the income test is an
issue that cannot be resolved by analysis. Those beneficiaries who do
not qualify for the LIS because their assets are above the program
threshold, but whose incomes are limited, may obtain access to drugs
through 23 state programs and through drug manufacturer programs.
However, the availability of these programs and the assistance they
offer are uneven, and they do not provide the coverage obtained through
a national program with uniform eligibility standards.
Agency Comments and Our Evaluation:
We provided a draft of this report to CMS (see app. II) and SSA (see
app. III). CMS concurred with our report and its concluding
observations. SSA expressed appreciation that we used its analysis of
applicants denied the LIS in 2006 and 2007 as the foundation of our
analysis of the impact of the assets test on LIS applicants. Both
agencies provided technical comments that we incorporated where
appropriate.
We are sending copies of this report to the Acting Administrator of CMS
and the Commissioner of Social Security. We will also provide copies to
others on request. In addition, this report is available at no charge
on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have questions about this report, please contact
me at (202) 512-7114 or steinwalda@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to
this report are listed in appendix IV.
Signed by:
A. Bruce Steinwald:
Director, Health Care:
List of Committees:
The Honorable Max Baucus:
Chairman:
The Honorable Charles E. Grassley:
Ranking Member:
Committee on Finance:
United States Senate:
The Honorable John D. Dingell:
Chairman:
The Honorable Joe L. Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Charles B. Rangel:
Chairman:
The Honorable Jim McCrery:
Ranking Member:
Committee on Ways and Means:
House of Representatives:
The Honorable Frank J. Pallone, Jr.
Chairman:
The Honorable Nathan Deal:
Ranking Member:
Subcommittee on Health:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Pete Stark:
Chairman:
The Honorable Dave Camp:
Ranking Member:
Subcommittee on Health:
Committee on Ways and Means:
House of Representatives:
[End of section]
Appendix I: Social Security Administration Application for the Low-
Income Subsidy, 2008:
Social Security Administration:
Important Information:
You may be eligible to get extra help paying for your prescription
drugs.
The Medicare Prescription Drug program gives you a choice of
prescription plans that offer various types of coverage.
You may he able to get extra help to pay for the monthly premiums,
annual deductibles, and co-payments related to the Medicare
Prescription Drug program.
But before we can help you, you must fill out the application, put it
in the enclosed envelope and mail it today. Or you may complete an
online application at [hyperlink, http://www.socialsecurity.gov]. We
will review your application and send you a letter to let you know if
you qualify for extra help. To use the extra help, you must enroll in a
Medicare Prescription Drug plan.
If you need help completing the application, call Social Security at 1-
800-772-1213 (TTY 1-800-325-0778). You can find more information at
[hyperlink, http://www.socialsecurity.gov].
If you need information about Medicare Prescription Drug plans or how
to enroll in a plan, call 1-800-MEDICARE (TTY 1-877-486-2048) or visit
[hyperlink, http://www.medicare.gov].
Mail your application today. We will give you a decision about whether
you qualify for the extra help.
Signed by:
Michael J. Astrue:
Commissioner:
General Instructions for Completing the Application for Help with
Medicare Prescription Drug Plan Costs:
Do you or the person you are helping apply have Medicare and
Supplemental Security Income (SSI) or Medicare and Medicaid?
If the answer is yes, do not complete this application because you
automatically will get the extra help.
Does your state Medicaid program pay your Medicare premiums because you
belong to a Medicare Savings Program?
If the answer is yes, contact your state Medicaid office for more
information. You could get the extra help automatically and may not
need to complete this application.
How To Complete This Application:
* Use black ink only;
* Keep your numbers, letters and X's inside the boxes; use only capital
letters;
* Do not add any handwritten comments on the application;
* Do not use dollar signs when entering money amounts; and;
* Cents can be rounded to the nearest whole dollar.
Example:
Place an X in the box. Do not fill in or use check marks in boxes.
Use capital letters when entering answers.
If You Are Assisting Someone Else With This Application:
Answer the questions as if that person were completing the application.
You must know that person's Social Security number and financial
information. Also, complete Section B on page 6.
Completing Your Application:
You may complete the online application at [hyperlink,
http://www.socialsecurity.gov] or use the enclosed pre-addressed
stamped envelope to return your completed and signed application to:
Social Security Administration:
Wilkes-Barre Data Operations Center:
P.O. Box 1020:
Wilkes-Barre, PA 18767-9910:
Return this application package in the enclosed envelope. Do not
include anything else in the envelope. If we need more information, we
will contact you.
If You Have Questions Or Need Help Completing This Application:
You can call us toll-free at 1-800-772-1213, or if you are deaf or hard
of hearing, you may call our TTY number, 1-800-325-0778.
Application for Help with Medicare Prescription Drug Plan Costs:
This Does Not Enroll You In A Medicare Prescription Drug Plan.
State code:
Exception:
1. Applicant's Name: Print name as it appears on your Social Security
card. Use one box for each letter.
First Name:
MI:
Last name:
Suffix:
Applicant's Social Security Number:
Applicant's Date of Birth:
2. If you are married and living with your spouse, please provide the
following information as it appears on your spouse's Social Security
card. If you are not currently married or do not live with your spouse,
skip to question 3 and do not include any information about your spouse
on this application.
First Name:
MI:
Last name:
Suffix:
Spouse's Social Security Number:
Spouse's Date of Birth:
If your spouse has Medicare, does he or she also wish to apply for the
extra help?
Yes:
No:
3. If you are married and living with your spouse, do you have savings,
investments or real estate worth more than $23,970? If not married or
you don't live with your spouse, do you have savings, investments or
real estate worth more than $11,990? Do not include the home you live
in, vehicles, personal possessions, burial plots or irrevocable burial
contracts.
Yes: If you place an "X" in the yes box, stop. You are not eligible for
the extra help and you do not need to return this application to us. If
you need a letter stating you are not eligible, sign the application on
page 6 and return it to us.
No Or Not Sure: If you place an in the no or not sure box, complete the
rest of this application and return it to us.
If you placed an "X" in the no or not sure box in question 3, answer
all of the following questions. If you are married and living with your
spouse, you must answer all of the questions for both of you.
4. Please enter the money amounts of all bank accounts, investments or
cash that either you, your spouse, if married and living together, or
both of you own in the boxes below. Include items that either of you
own with another person. Include only the dollar figures, not the
account number. If you or your spouse do not own an item listed, either
separately, jointly or with another person, place an "X" in the none
box.
Combined total of all bank accounts (checking, savings and certificates
of deposit):
None:
Combined total of all stocks, bonds, savings bonds, mutual funds,
Individual Retirement Accounts or other similar investments:
None:
Any other cash at home or anywhere else:
None:
5. Do you own life insurance policies with a total face value of more
than $1,500? Answer for you and your spouse if your spouse lives with
you. If you answer no for both you and your spouse, go to question 6.
You:
Yes:
No:
Spouse:
Yes:
No:
If you answered yes for either of you, how much money would you get if
you turned in your policies for cash right now? Enter the amount. If
you answered yes for both you and your spouse, enter the combined
amount. This is not the face value of your policies. You may need to
call your insurance company to help answer this question.
Amount:
6. Will some money from the sources listed in questions 4 and 5 be used
to pay for funeral or burial expenses? If yes, skip to question 7. If
NO, place an "X" in the no box, then go to question 7.
You:
No:
Spouse:
No:
7. Other than your home and the property on which it is located, do you
or your spouse, if married and living together, own any real estate?
Examples of other real estate are summer homes, rental properties or
undeveloped land you own.
Yes:
No:
8. Not counting your spouse if you are married, how many other
relatives live in your household and receive at least one-half of their
financial support from you or your spouse? We count relatives related
to you by blood, marriage or adoption.
Place an "X" in only one box. Do not include yourself or your spouse in
the number you enter. If your household consists only of you or you and
your spouse, place an "X" in the None box.
None:
1:
2:
3:
4:
5:
6:
7:
8:
9 or more:
9. If you or your spouse, if married and living together, receive
income from any of the sources listed below, please enter the total
amount you receive each month. If the amount changes from month to
month or you do not receive it every month, enter the average monthly
income for the past year for each type in the appropriate boxes. Do not
list wages and self-employment, interest income, public assistance,
medical reimbursements or foster care payments here. if you or your
spouse do not receive income from a source listed below, place an "X"
in the none box for that source.
Social Security benefits:
Monthly Benefit:
None:
Railroad Retirement benefits before deductions:
Monthly Benefit:
None:
Veterans benefits before deductions:
Monthly Benefit:
None:
Other pensions or annuities before deductions. Do not include money
you receive from any item you included in question 4:
Monthly Benefit:
None:
Other income not listed above, including alimony, net rental income,
workers' compensation, etc. (Specify):
Monthly Benefit:
None:
10. Have any of the amounts you included in question 9 decreased during
the last two years?
Yes:
No:
11. Do you count on anyone to help pay for any of the following
household expenses - food, mortgage, rent, heating fuel or gas,
electricity, water and property taxes? Do NOT include food stamps,
house repairs, help from a housing agency, an energy assistance
program, Meals on Wheels, contributions from food banks, soup kitchens
or help with medical treatment and drugs. Do not include small amounts
of money given occasionally or unexpectedly.
Yes:
No:
If you place an "X" in the YES box, enter the monthly amount or, if the
amount changes from month to month, enter the average monthly amount
for the past year.
If you have worked in the last two years, you need to answer questions
12-16. If you are married and living with your spouse and either one of
you has worked in the last two years, you need to answer questions 12-
16. Otherwise, sign the application on page 6 and return it to us.
12. What do you expect to earn in wages before taxes and deductions
this calendar year?
You:
Amount:
None:
Spouse:
Amount:
None:
13. What do you expect your net earnings from self-employment to be
this calendar year?
Place an "X" in the none box if you are not self-employed and go to
question 14.
You:
Amount:
None:
Spouse:
Amount:
None:
14. Have the amounts you included in questions 12 or 13 decreased in
the last two years?
Yes:
No:
15. If you or your spouse, stopped working in 2007 or 2008, or plan to
stop working in 2008 or 2009, enter the month and year:
You:
Month:
Year:
Spouse:
Month:
Year:
If you are younger than age 65, answer question 16. If you are married
and living with your spouse and either one of you is younger than age
65, answer question 16. Otherwise, sign the application on page 6 and
return it to us.
16. Do you or your spouse have to pay for things that enable you to
work? We will count only a part of your earnings toward the income
limit if you work and receive Social Security benefits based on a
disability or blindness and you have work-related expenses for which
you are not reimbursed. Examples of such expenses are: the cost of
medical treatment and drugs for AIDS, cancer, depression or epilepsy; a
wheelchair; personal attendant services; vehicle modifications. driver
assistance or other special work-related transportation needs; work-
related assistive technology; guide dog expenses; sensory and visual
aids; and Braille translations.
You:
Yes:
No:
Spouse:
Yes:
No:
Signatures:
Important Information - Please Read Carefully:
I/We understand that the Social Security Administration (SSA) will
check my/our statements and compare its records with records from
Federal, State, and local government agencies. including the Internal
Revenue Service (IRS) to make sure the determination is correct.
By submitting this application, I am/we are authorizing SSA to obtain
and disclose information related to my/our income, resources, and
assets, foreign and domestic, consistent with applicable privacy laws.
This information may include, but is not limited to, information about
my/our wages, account balances, investments, insurance policies,
benefits, and pensions.
I/We declare under penalty of perjury that I/we have examined all the
information on this form and it is true and correct to the best of
my/our knowledge.
Please complete Section A. If you cannot sign, a representative may
sign for you. If someone assisted you, complete Section B as well.
Section A:
Your Signature:
Date:
Phone Number:
Spouse's Signature:
Date:
Phone Number:
Your Mailing Address:
Apt. #:
City:
State:
Zip Code:
If you changed your mailing address within the last three months, place
an "X" here:
If you would prefer that we contact someone else if we have additional
questions, please provide the person's name and a daytime phone number.
Print First Name:
Print Last Name:
Phone Number:
Section B:
If someone assisted you, place an "X" in the box that describes that
person and provide the rest of the information requested below.
Family Member:
Friend:
Attorney:
Agency:
Other Advocate:
Social Worker:
Other, Specify:
Print First Name:
Print Last Name:
Address:
City:
State:
Zip Code:
Privacy Act/Paperwork Reduction Notice:
Section 1860 D-14 of the Social Security Act authorizes the collection
of information requested on this form. The information you provide will
be used to enable the Social Security Administration to determine if
you are eligible for help paying your share of the cost of a Medicare
Prescription Drug Plan. You do not have to give us the information
requested. However, if you do not provide the information, we will be
unable to make an accurate and timely decision on your application. We
may provide information collected on this form to another Federal,
Stale, or local government agency to assist us in determining your
eligibility for the extra help or if a Federal law requires the release
of information.
We may also use the information you give us when we match records by
computer. Matching programs compare our records with those of other
Federal. State, or local government agencies. Many agencies may use
matching programs to find or prove that a person qualifies for benefits
paid by the Federal government. The law allows us to do this even if
you do not agree to it. Explanations about these and other reasons why
information you provide us may be used or given out are available in
Social Security offices. If you want to learn more about this, contact
any Social Security office.
Paperwork Reduction Act Statement - This information collection meets
the requirements of 44 U.S.C. § 3507, as amended by section 2 of the
Paperwork Reduction Act of 1995, You do not need to answer these
questions unless we display a valid Office of Management and Budget
control number. We estimate that it will take about 35 minutes to read
the instructions, gather the facts, and answer the questions. You may
send comments on our time estimate above to: SSA, 6401 Security Blvd.,
Baltimore, MD 21235-6401. Send only comments relating to our time
estimate to this address, not the completed form.
Send The Completed Form To Us At The Address Shown On The Enclosed Pre-
Addressed Envelope:
Social Security Administration:
Wilkes-Barre Data Operations Center:
P.O. Box 1020:
Wilkes-Barre, PA 18767-9910:
Form SSA-102OB-OCR-S11 (12-2007):
[End of section]
Appendix II: Comments from the Centers for Medicare & Medicaid
Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
August 8, 2008:
A. Bruce Steinwald:
Director, Health Care:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Steinwald:
Enclosed are the Departments comments on the U.S. Government
Accountability Office's (GAO) draft report entitled: "Medicare Part D
Low Income Subsidy: Assets and Income Are Both Important in Subsidy
Denials, and Access to State and Manufacturer Drug Programs Is Uneven"
(GAO 08-824).
The Department appreciates the opportunity to comment on this report
before its publication.
Sincerely,
Signed by:
Jennifer R. Luong, for:
Vincent J. Ventimiglia, Jr.
Assistant Secretary for Legislation:
Attachment:
Department Of Health & Human Services:
Centers for Medicare and Medicaid Services:
Administrator:
Washington, DC 20201:
Date: August 6, 2088:
To: Vincent J. Ventimiglia. Jr.
Assistant Secretary for Legislation:
Department of Health and Human Services:
From: [Signed by} Kerry Weems:
Acting Administrator:
Subject: Government Accountability Office (GAO) Draft Report: "Medicare
Part D Low Income Subsidy-s and Income Are Both Important in Subsidy
Denials, and Access to State and Manufacturer Drug Programs Is Uneven"
(GAO-08-824):
Thank you for the opportunity to review and comment on the above draft
GAO report. the first of two reports on this topic. Under the Medicare
Part D program, millions of low-income individuals who otherwise would
have no drug coverage now have access to a generous drug benefit. It
should not be overlooked that those who do not qualify for the Part D
low-income subsidy (LIS) still have access to a meaningful and
affordable prescription drug plan.
The GAO's report indicates that, in 2006 and 2007. more than half of
the individuals who applied for the LIS under the Medicare Part D
prescription drug benefit program were denied. While assets and income
were both important factors in these denials, income was of greater
importance. The GAO further reports that both State Pharmaceutical
Assistance Programs and drug manufacturers' Patient Assistance Program
assist low income individuals in obtaining prescription drugs, but that
coverage is limited and non-uniform.
The Centers for Medicare & Medicaid Services (CMS) concurs with the
report and its concluding observations, and believes the information in
the report will be useful as we continue to work with our partners and
reach out to potential LIS eligibles.
[End of section]
Appendix III: Comments from the Social Security Administration:
Social Security:
The Commissioner:
Social Security Administration:
Baltimore, MD 21235-0001:
August 4, 2008:
Mr. A. Bruce Steinwald:
Director, Health Care:
U.S. Government Accountability Office:
441 G St., NW:
Washington, D.C. 20548:
Dear Mr. Steinwald:
Thank you for the opportunity to review and comment on the draft
report, "Medicare Part D Low-Income Subsidy: Assets and Income Are Both
Important in Subsidy Denials, and Access to State and Manufacturer Drug
Programs Is Uneven" (GAO-08-824).
We appreciate you using our analysis of applicants who received denials
for Low-Income Subsidy (LIS) in 2006 and 2007 as the foundation for
your analysis of the impact of the asset test on LIS applicants.
Enclosed are our suggested technical revisions.
Please refer any questions concerning our comments to Candace Skurnik,
Director, Audit Management and Liaison Staff, at (410) 965-4636.
Sincerely,
Signed by:
Michael J. Astrue:
Enclosure
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
A. Bruce Steinwald, (202) 512-7114 or steinwalda@gao.gov:
Acknowledgments:
In addition to the contact above, Phyllis Thorburn, Assistant Director;
Carolyn Garvey; Drew Long; Maya Tholandi; and Eric Wedum made key
contributions to this report.
[End of section]
Footnotes:
[1] Pub. L. No. 108-173, § 101, 117 Stat. 2066, 2071.
[2] Part D drug coverage is available either through stand-alone
prescription drug plans (PDP) for Medicare beneficiaries in traditional
fee-for-service Medicare, or through Medicare Advantage prescription
drug plans for beneficiaries enrolled in Medicare's managed care
program. The majority of Part D enrollees are in stand-alone PDPs.
[3] The MMA refers to resources; in this report, we use the term
assets. The Social Security Administration (SSA) provides the following
examples of assets: real estate (other than one's primary residence);
bank accounts, including checking, savings, and certificates of
deposit; stocks; bonds, including U.S. Savings Bonds; mutual funds;
individual retirement accounts (IRA); and cash at home or anywhere
else.
[4] Applicants can enroll in a Part D plan and subsequently apply for
the LIS, or they may apply for the LIS first. See 42 U.S.C. § 1860D-
14(a)(3).
[5] The LIS determination for both income and assets is updated
annually by increases in the Consumer Price Index.
[6] The MMA permits beneficiaries to apply to their state Medicaid
programs for the LIS, but few do so. See GAO, Medicare Part D Low-
Income Subsidy: Additional Efforts Would Help Social Security Improve
Outreach and Measure Program Effects, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-555] (Washington, D.C.: May
31, 2007) and Medicare Part D Low-Income Subsidy: SSA Continues to
Approve Applicants, but Millions of Individuals Have Not Yet Applied,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-812T] (Washington,
D.C.: May 22, 2008).
[7] Pub. L. No. 108-173, § 107(e), 117 Stat. 2171.
[8] Except for qualified disabled and working individuals, dual
eligible individuals are those who are entitled to Medicare and are
also eligible for some form of Medicaid benefit. Medicaid is a joint
federal-state program that finances health care services for certain
persons with low income.
[9] The two periods overlap: the last quarter of calendar year 2006 is
also the first quarter of fiscal year 2007.
[10] Medicare Part A pays for inpatient hospital stays, care in skilled
nursing facilities, hospice care, and some home health care. Part B
pays for doctors' services, outpatient hospital care, durable medical
equipment, and certain other services, such as physical therapy.
[11] Plans may require different payments so long as the plan is
actuarially equivalent to the standard benefit.
[12] Dollar amounts are subject to annual adjustment to account for the
increase in expenditures for Part D drugs.
[13] Medicare Savings Programs are offered by state Medicaid agencies
to assist people with limited income and resources with their Medicare
premiums and, in some cases, may also pay Medicare Part A and Part B
deductibles and coinsurance.
[14] Part D plans are offered in 34 designated regions made up of
single states or groups of states. The premium subsidy amount for a
regional Part D plan is equal to the lesser of the following two
amounts: (1) in the case of a plan other than a Medicare Advantage drug
plan, the plan's monthly Part D premium for basic prescription drug
coverage or the portion of the premium attributable to such coverage
for a plan that has enhanced alternative coverage, or the Medicare
Advantage monthly prescription drug premium for those enrolled in such
a plan, or (2) the greater of the low-income benchmark premium amount
for a PDP region or the lowest premium for a prescription drug plan
(PDP) that offers basic prescription drug coverage in the PDP region.
The benchmark premium for each region is based on a weighted average of
the premiums for basic prescription drug coverage charged by the Part D
plans available in the region.
[15] The premium subsidy for these LIS recipients is 100 percent of the
premium subsidy amount if a beneficiary's income is at or below 135
percent of the applicable FPL, 75 percent if it is greater than 135
percent but less than or equal to 140 percent of the FPL, 50 percent if
it is greater than 140 percent but less than or equal to 145 percent of
the FPL, and 25 percent if it is greater than 145 percent and less than
150 percent of the FPL.
[16] CMS facilitates or auto-enrolls most LIS recipients into a
Medicare Part D prescription drug plan.
[17] The MMA permits beneficiaries to apply to their state Medicaid
programs for the LIS, but few do so. See GAO-07-555 and GAO-08-812T.
[18] The SSA application form is reproduced in appendix I.
[19] SSA officials considered using income rather than assets in the
initial screening question. However, they chose assets as a screener
because it is more straightforward--there are only two variants of the
assets limits (individuals or couples).
[20] Section 116 of the Medicare Improvements for Patients and
Providers Act of 2008, Pub. L. No. 110-275, provides an exemption from
income of in-kind support and maintenance, and an exemption from
resources of the value of any life insurance policy for purposes of the
LIS determination. These provisions are applicable, however, only to
applications filed on or after January 1, 2010.
[21] CMS originally required a state program to offer wrap-around
benefits to Part D-eligible beneficiaries, regardless of which Part D
plan the beneficiary enrolled in. In 2008, these requirements were
revised, permitting SPAPs to enroll their beneficiaries into plans
meeting state-specific coordination criteria, such as offering similar
formularies or expanding pharmacy networks. SPAPs are required to
submit information about their program and coordination criteria to CMS
before the start of the benefit year, and CMS reviews these criteria to
ensure that they do not restrict enrollment to a small number of plans.
See 42 C.F.R. § 423.464 for an explanation of other requirements to be
a qualified SPAP.
[22] Two states operate SPAPs that are not open to Medicare
beneficiaries.
[23] The three remaining SPAPs provide assistance to individuals in
high-risk pools. Such individuals have been rejected by insurance
carriers or have substantially reduced coverage due to preexisting
medical conditions or other restrictions.
[24] For 2008, the threshold for the asset test in North Carolina's
SPAP was higher than that for the LIS--$22,381 versus $11,990 for
individuals and $34,322 versus $23,970 for couples.
[25] Some SPAPs, including New York's Elderly Pharmaceutical Insurance
Coverage program, pay Part D enrollees' coinsurance after the
catastrophic coverage threshold.
[26] Enrollees may be required to meet an income threshold or enroll in
designated prescription drug programs.
[27] Medicare Part D requires every plan to provide coverage of broad
classes of drugs in its formulary; however, the plan is not required to
include every brand in the class in its formulary. For example, every
plan must pay for statins, which are widely used to lower cholesterol,
but a plan may choose to pay for Zocor but not Lipitor.
[28] According to The Partnership for Prescription Assistance, a
collaboration among pharmaceutical companies, medical care providers,
patient advocates, and other groups, there are more than 180 PAPs
sponsored by manufacturers, some of which do not accept Medicare
beneficiaries.
[29] According to RxAssist, a pharmaceutical access information center
operated by Volunteers in Health Care (based in the Brown University
Center for Primary Care and Prevention), 35 PAPs do not accept Part D
enrollees, and another 22 do not accept any Medicare beneficiaries.
[30] In many cases, PAPs require applicants to submit supporting
documentation, such as income tax returns, W-2 forms, bank statements,
Social Security benefit statements, or unemployment benefit statements.
Some PAPs also require applicants to provide information about their
assets or require that their out-of-pocket spending exceed a percentage
of their income.
[31] The Department of Health and Human Service's (HHS) Office of
Inspector General (OIG) issued an advisory opinion in April 2006
stating that as long as a PAP operates entirely outside of the Part D
benefit, the program can provide free and discounted drugs to Medicare
beneficiaries (HHS, OIG, OIG Advisory Opinion No. 06-03, Apr. 18,
2006).
[End of section]
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