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Punishing Thrift
November 2, 2006 • Volume 6, Issue 44For older adults and people with disabilities struggling to make ends meet, the Extra Help program under Part D can mean the difference between being able to afford life-sustaining medicines and walking away from the pharmacy counter empty-handed. The Extra Help program helps people with Medicare who have low incomes and limited financial resources pay for their drug plan premiums, fill the gap or “doughnut hole” in Part D coverage and reduce their copayments.
Unfortunately, too many people do not get the help they need because of the asset test. This test unfairly punishes people who have accumulated even modest savings over their lifetime. For some, a denial of Extra Help is like a kick in the teeth:
I am losing my Extra Help because of Hurricane Katrina. I lost everything: my home, my car and all my belongings. The government paid me $60,000 for my losses. Now my assets are too high for the Extra Help. Why should I be penalized because of this?
I called Elder Info, the Delaware SHIP [State Health Insurance Assistance Program], as well as Social Security. No one could help me.
I do not have some of the money anymore, because I had to move to Delaware and set up a new apartment. But I still have too much to qualify for the Extra Help. Shouldn’t the government take Hurricane Katrina into account when judging assets?
Debbie D.
Story submitted to the Medicare Rights Center Part D Monitoring ProjectDebbie asks a good question and the answer is clearly “yes,” but there are many other less dramatic cases that make a strong argument for eliminating the asset test. Roughly half of the individuals who applied to Social Security Administration for Extra Help were rejected because their financial assets were too high. Their incomes put them at or near the poverty line, but having just $13,000 stashed in the bank for an emergency puts them over the top.
Elimination of the asset test should be high on the list of the new Congress in 2007. The Medicare Rights Center asked candidates in a handful of tight races across the country whether they would sponsor legislation to get rid of this barrier. Encouragingly, candidates for both the House and Senate in nine states said they would.
One candidate, Coleen Rowley, candidate in Minnesota’s 2nd Congressional District, cautioned that individuals with great financial resources—$1 million, for example— should not be allowed to game the system. This is a legitimate concern, but there is strong evidence that the number of individuals with incomes near the poverty line who have great financial resources is exceedingly small because substantial assets create income. In fact, several states have eliminated the asset test for Medicare Savings Programs for that very reason. It creates an administrative nightmare to verify assets, and it is rare for someone to have substantial assets and very low income.
Getting rid of the asset test will also greatly facilitate enrollment in the Extra Help program. It will simplify the application process and enable the government to better target outreach and enrollment efforts based on the income data it already has. The administration estimated in May that 3.2 million people remained unenrolled in Part D and the Extra Help program. Months later, that number remains virtually unchanged.
When Congress returns in January, it should immediately move to eliminate the asset test and allow the Extra Help program to reach everyone who truly needs it.
Medical Record
The 2006 income limit to qualify for full Extra Help is $13,230 for individuals and $17,820 for couples. In addition, assets cannot exceed $7,500 for individuals and $12,000 for couples. To qualify for partial Extra Help, the income limit is 150 percent of the federal poverty level, and assets must be below $11,500 for individuals and $23,000 for couples (“Extra Help Paying for Your Medicare Prescription Drug Coverage,” Medicare Rights Center, 2006).
“According to Social Security Administration officials, 57% of individuals found ineligible for the [Extra Help] program actually met the income requirements for enrollment, but were denied eligibility because their financial assets—bank accounts, insurance policies, etc.—disqualify them for the program. The asset test penalizes Americans who have saved up to provide some security for themselves and their families. It requires people to cash out life insurance policies or draw down hard-earned savings to pay for medicine that remains unaffordable even with Part D coverage” (Background Information for 2006 Congressional Survey, Medicare Rights Center, October 2006).
“Older people who qualify for [Medicare Savings] programs based on income but fail the asset test are not wealthy. Among people age 65 and older who meet income but not asset eligibility limits, the median amount by which they exceed asset limits is $6,500” (“How Asset Tests Block Low-Income Medicare Beneficiaries from Needed Benefits,” The Commonwealth Fund, May 2004).
***** The Medicare Rights Center (MRC) needs to hear about all the problems with the Medicare Part D benefit, whether they happen to you or someone in your community. With this information, we will be armed with the needed evidence to push for a Medicare-administered drug benefit.
Fast Relief: Part D Monitoring Project
Submit your story at www.medicarerights.org/partdstories.html
*****
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