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A federal assistance program that helps low-income Medicare beneficiaries afford prescription drug coverage
Medicare Extra help can save eligible beneficiaries about $4,900 each year on Medicare prescription drug coverage
The Social Security Administration (SSA) oversees Medicare Extra Help
Income and asset limits for the Medicare Extra Help program change every year
You cannot use Extra Help with a Medicare Advantage plan
Medicare provides health insurance to seniors and those with certain disabilities. It comes in four parts. Medicare Part A and B make up Original Medicare, which covers hospital insurance and visits to a doctor. Original Medicare doesn’t cover prescription drugs, though.
To get prescription drug coverage, Medicare recipients need to pay for a Part D Medicare Prescription Drug plan, which means a monthly premium and copays or coinsurance.
If you can’t afford a Medciare Part D plan, you may qualify for Medicare Extra Help. The program, which is run by the Social Security Administration (SSA), reduces or eliminates the monthly premiums and annual deductibles. It also decreases the cost of your copays and coinsurance. You cannot use it with Medicare Advantage plans (Part C).
The amount of assistance varies by income, but Medicare Extra Help coverage saves eligible beneficiaries about $4,900 each year, according to the Social Security Administration.
You will automatically qualify for Medicare Extra Help if you have Medicare and also meet any of these conditions:
To learn more about whether or not you qualify for Medicaid, check our state-by-state guide to Medicaid.
If you don’t qualify for Extra Help based on the criteria above, you may still qualify if you are at least 65 years old, live in the U.S., have Medicare Part A and Part B, and your annual income is within the annual income and total asset limits.
Income and asset limits are based on the federal poverty guidelines (also known as the federal poverty level or FPL). The poverty guidelines change each year, so make sure to check again around February or March. Below are the Medicare Extra Help income and asset limits for 2019, sorted by filing status.
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|Filing status||Annual income||Total assets|
New income and asset limits will be released in 2021.
Your assets include money that you have across all types of savings accounts, checking accounts, and investment accounts. Make sure to consider your retirement accounts like an IRA or 401(k), as well any stocks or bonds you own. Real estate that you own other than your primary residence also counts toward your total assets in most cases.
Your assets do not include your home, a car, a burial plot, furniture, or any other personal items. Life insurance policies are excluded and you can subtract $1,500 per person for burial expenses. You don’t have to include any advance tax credits you get, such as for the earned income tax credit, or money you received for housing assistance. You can find a complete list of exemptions on the SSA website.
Even if you qualify for Medicare Extra Help, your income level, resource level, marital status, and Medicaid eligibility will determine whether you qualify for full or partial Extra Help.
Medicare Extra Help can be understood in relation to Medicare Part D. If you qualify for Extra Help, then it reduces your Part D out-of-pocket costs. In certain circumstances, you'll pay $0 in Part D premiums and deductibles and heavily reduced copays for prescriptions. The table below explains how Extra Help reduces Part D costs.
In 2021, when you spend $6,550 in out-of-pocket costs for Medicare prescription drug coverage during the year, your copays will be reduced even further. (The threshold was $6,350 in 2020.)
If you qualify for both Medicaid and Medicare Extra Help, and are receiving care in an institution, such as an assisted living facility, nursing home, or rehabilitation hospital, or from certain home and community health services, then Extra Help may reduce your Part D costs to nothing.
If you make 150% of the FPL or more, then you don't qualify for Medicare Extra Help.
You automatically qualify for Extra Help and do not need to apply if you receive full Medicaid benefits, you’re enrolled in a Medicare Savings Program, or you receive Supplemental Security Income (SSI) benefits.
In all other scenarios, you can apply online for Medicare Extra Help through the Social Security Administration site. You can also apply in person at your local Social Security office or call 1-800-722-1213 to apply over the phone. You can also call to request a physical application by mail.
Once you apply, the SSA will review your application and send a letter saying whether or not you were approved. If you do qualify for Extra Help, you need to enroll in a Medicare Part D prescription drug plan. You can do so right away because approval for Extra Help qualifies you for a Medicare special enrollment period. Compare plans in your state on the Medicare website, which will help you apply for one directly through the insurer.
Once you have a plan, you’ll have to provide the insurer with documentation to prove that you are receiving Extra Help. The documents that count as proof include
Once you provide documentation, you will immediately start paying the lower Extra Help drug prices.
Remember that the income and asset limits for Extra Help change every year. Just because you qualify one year does not mean you will qualify the next. You’ll receive a notice from Medicare around the end of September if the SSA believes you no longer automatically qualify for Extra Help.
In this case, you will need to reapply for the program through SSA.gov or your local Medicaid office.
Derek is a tax expert at Policygenius in New York City. He has written about multiple personal finance topics in the past, and his work has been covered by Yahoo Finance, MSN, Business Insider and CNBC.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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