People with Medicare who are also eligible for Medicaid because of high medical expenses can get Medicare prescription coverage even if they’re in Original Medicare or a Medicare Advantage Plan, or if they have existing prescription coverage.
What do people with Medicare and Medicaid need to know about Medicare prescription drug coverage?
People with Medicare and Medicaid automatically qualify (so don’t need to apply) for Extra Help to pay for Medicare prescription drug coverage. This means they may pay only a small copay when they fill prescriptions covered by their Medicare drug plan. Medicaid will still pay for some or all of a person’s health care costs that Medicare doesn’t cover.
In limited cases, this can include prescriptions for drugs not eligible for coverage by Medicare prescription drug coverage. Usually Medicaid can’t cover drugs for people who are enrolled, or could be enrolled, in a Medicare drug plan.
If a person gets Extra Help paying for Medicare prescription drug costs, will the Extra Help affect their eligibility for Medicaid?
It’s possible that under the “spend down” process a person may become eligible for Medicaid, even if they have too much income to qualify otherwise. This process allows someone to “spend down,” or subtract, medical expenses (think “prescriptions”) from their income, lowering their income to the point where it’s below the maximum allowed by a state’s Medicaid plan.
In limited cases, this can include drugs not eligible for coverage by Medicare prescription drug coverage. Usually Medicaid can’t cover drugs for people who are enrolled, or could be enrolled, in a Medicare drug plan. Below, see how qualifying for Extra Help may affect Medicaid eligibility.
Julie has Medicare and gets $700 a month in Social Security. Her income is too high for her to qualify for Medicaid in her state. Her state’s Medicaid income limit is $500 a month, which means she must have at least $200 a month in medical expenses to spend down to the state’s limit. She pays $150 a month out-of-pocket for prescriptions and $75 most months for doctor visits, totaling $225 per month. After she has $200 in medical expenses, she qualifies for Medicaid. Medicaid pays the additional $25 of her medical expenses, leaving her with $500 for other expenses. Since Julie paid for her prescriptions after the effective date of Extra Help, her Medicare drug plan pays her back for the prescription costs covered by the Extra Help. Julie gets Medicaid and automatically qualifies for Extra Help paying Medicare prescription drug costs for the rest of the calendar year, even if she doesn’t qualify for Medicaid in some later months if she has lower medical expenses.
With Extra Help and a Medicare drug plan, Julie pays no monthly premium, no deductible, and only small copays. Her copays are $1 for each of her 10 generic prescriptions, for a total of $10. She spends $75 for doctor visits, for a total of $85 in medical expenses. Her medical expenses are no longer high enough to qualify for Medicaid (she doesn’t exceed her $200 limit under spend down). But the Extra Help she gets increases the income available to her. She now has $615 available for other expenses, $115 more than she had before getting Extra Help.
During a month where Julie’s medical expenses for items other than prescription drugs are high, she will qualify for Medicaid once she has medical expenses of at least $200. For example, Julie has another $210 in medical expenses (like doctor visits) and $10 in total prescription drug copays for a total of $220. She meets her spend down amount and qualifies for Medicaid. She can still rely on Medicaid in months when she has higher medical expenses.
What if a person is notified that they no longer qualify for Extra Help as of January 1 next year?
Each fall, Medicare uses state data to decide whether a person will continue to automatically qualify for Extra Help in the coming year.
Using the above example, let’s say Medicare determines that Julie no longer automatically qualifies for Extra Help. Medicare reviews data from her state for a month where she doesn’t qualify for Medicaid (month 2). Medicare sends her a gray letter saying she doesn’t automatically qualify and encourages her to apply for Extra Help through Social Security to see if she qualifies based on her income and resources. Even though she no longer automatically qualifies, Julie may still qualify for Extra Help if she applies.
After not qualifying (month 2), Julie can meet spend down again in a later month (month 3). Her state tells Medicare, and she gets a letter from Medicare saying she automatically qualifies for Extra Help beginning from the month she qualified for Medicaid at least until December 31 of the same year.
For more information about Medicare prescription drug coverage visit Medicare.gov/find-a-plan, call 800-MEDICARE or call your State Health Insurance Assistance Program (in Delaware call 800-336-9500). Visit Medicare.gov/contacts or call 800-MEDICARE for the phone number.