What is the Medicare Low-Income Subsidy?

Eligible beneficiaries who have limited income may qualify for a government program that helps pay for Medicare Part D prescription drug costs.

Medicare beneficiaries receiving the low-income subsidy (LIS) get assistance in paying for their Part D monthly premium, annual deductible, coinsurance, and copayments. Also, individuals enrolled in the Extra Help program do not have a gap in prescription drug coverage, also known as the coverage gap, or the Medicare "donut hole." The amount of subsidy depends on the individual's income compared to the Federal Poverty Level and resource limitations set by the Social Security Act.

Medicare Extra Help eligibility

You may qualify for the low-income subsidy available under Medicare Part D if:

• Your annual income and assets are below the eligibility thresholds. The Medicare Extra Help program eligibility limits may change from year to year. For the most up-to-date levels, visit Medicare.gov.
• Your annual income is higher than the eligibility limit, but you support other family members who also live in the same household; or you live in Hawaii or Alaska.

Assets that count toward eligibility include:

• Cash and bank accounts, including checking, savings, and certificates of deposit
• Real estate outside of your primary residence
• Stocks and bonds, including U.S. savings bonds
• Mutual funds and IRAs

When calculating eligibility for the low-income subsidy, Medicare does not count resources such as your home (or primary residence); insurance policies; or a car. Many people qualify for Medicare Extra Help savings and do not know it. The best way to find out if you qualify is to go ahead and apply.

How to apply for Medicare Extra Help

To apply for the Medicare low-income subsidy, simply fill out an "Application for Extra Help with Medicare Prescription Drug Plan Costs" (SSA-1020) form with Social Security. You can apply and submit this form by:

• Applying online at www.socialsecurity.gov/extrahelp.
• Calling Social Security at 1-800-771-1213 (TTY 1-800-325-0778) and requesting an application be mailed to you or applying over the phone. Social Security representatives are available by phone Monday through Friday, from 7AM to 7PM.
• Applying in person at your local Social Security office.

After you submit your application, Social Security will review it and send you a notification in the mail if you are eligible. If you qualify for Extra Help and are not yet enrolled in a Medicare Part D Prescription Drug Plan, you can enroll in a plan at that time.