The Case for Expanding the Medicare Extra Help Program

The Extra Help program, also known as the Low-Income Subsidy, has the potential to help millions of Medicare-eligible people afford prescription drug costs. But its restrictive income and asset limits and complicated application process are hampering its ability to fulfill its intention.

Although it’s called the Extra Help program, it hasn’t always lived up to its name.

“I have had Extra Help in the past and no longer qualify because I am just above the Social Security limit,” said Marcia from Florida, who is living with multiple sclerosis. Her prescription medications cost more than $8,000 per year. Because her income disqualifies her for Extra Help, she must turn to charitable patient assistance foundations or go without her medications. In 2021, the annual income limit for Extra Help for an individual is $17,388 ($1,449 per month) and the asset limit is $14,790.

While Congress considers drug pricing legislation and Medicare reforms, it would be wise to expand and update the Extra Help program to enable more people with limited incomes to afford their medications.

This federal subsidy program also has an important equity component: About half of Black and Hispanic older adults have family incomes below 200 percent of the Federal Poverty Level — nearly twice as many as white older adults. There is an even wider gap in average household savings.  Among Medicare beneficiaries, the median savings for white adults is eight times higher than for Black adults and nearly 12 times higher than for Hispanic adults. Expanding the Extra Help program could help decrease these stark health inequities when it comes to prescription medication access.

Congress should modernize the program by:

  • Expanding the restrictive income and asset requirements,
  • Eliminating cost-sharing for generic drugs, and
  • Simplifying the application process and increasing outreach to the people who need it most.

Expand restrictive income and asset requirements

First, we recommend eliminating the program’s asset test and expanding the eligibility for the full program to people with incomes up to 200 percent of the Federal Poverty Level, or $25,760 for an individual. The asset eligibility test penalizes low-income beneficiaries who did the right thing during their working years by setting aside a modest nest egg of savings to use in case of emergencies.

Older adults find themselves at a crossroads: If they save, they will be unable to receive federal assistance. And if they do not save or are forced to exhaust their limited assets, they will receive Extra Help but may have little to fall back on other than their Social Security checks.

In addition, the current system offers a partial Extra Help benefit with higher cost-sharing for people with incomes below $19,320 ($1,610 per month). Eliminating the partial program and instead offering full assistance to all would increase medication adherence and reduce complexity and administrative costs. One study of Medicare beneficiaries showed that the out-of-pocket costs to fill the first prescription of a new cancer medication was $3 for Extra Help recipients and $3,178 for beneficiaries who didn’t receive Extra Help. Beneficiaries in the program were also more likely to start the new treatment and less likely to have interruptions in treatment.

Eliminate cost-sharing for generic drugs

Another incremental improvement would be to eliminate generic drug cost-sharing for Extra Help enrollees. This proposal would encourage beneficiaries to use lower-priced drugs when possible, and reduce out-of-pocket costs for these vulnerable beneficiaries.

Simplify the application process and increase outreach

In promotional materials created this year, the Social Security Administration said that “many people qualify for these big savings and don’t even know it.” Additional analysis by the National Council on Aging suggests that about one-third of eligible older adults are missing out on Extra Help.

Even for those who do know about the program, the application process is complicated and can be intimidating for those without internet access or a certain level of literacy. Many organizations, including the PAN Foundation and NCOA, routinely promote educational resources to help qualifying people navigate the process. Streamlining the application and increasing outreach to vulnerable communities could yield big benefits.

Expanding the Extra Help program would have a tremendous impact on the lives of millions of economically vulnerable older adults and people living with disabilities across the country. We urge Congress to take up these measures immediately.

Amy Niles is executive vice president at the PAN Foundation, where she oversees PAN’s relations and partnerships with the patient advocacy community.

Howard Bedlin is government relations and advocacy principal at the National Council on Aging, where he is responsible for all of NCOA’s federal and state legislative advocacy efforts on issues and programs of concern to older adults, including the Older Americans Act, Medicare, Medicaid, long-term care, income security and community services programs.

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