Who qualifies for Medicare Extra Help? How to apply

Even though Medicare is federally funded, it isn’t free. Medicare costs vary from person to person, depending on various health and other factors. Monthly premiums, annual deductibles, and copayments can quickly add up. Pile monthly prescription drug costs on top of that, and it’s a pretty formidable expense. That’s where Extra Help (AKA Part D Low-Income Subsidy) comes in. 

What is Medicare Extra Help?

Medicare Extra Help is a federal subsidy that assists Medicare Part D enrollees in paying out-of-pocket costs associated with their Medicare prescription drug plan. 

What does Medicare Extra Help cover?

Extra Help applies to Medicare Part D expenses only. It will not pay for Part A or Part B premiums, deductibles, or copays. Extra Help is estimated to be worth $5,300 per year, according to the Social Security Administration; however, the level of Extra Help a beneficiary receives depends primarily on their annual income. Extra Help will fully or partially cover various Part D expenses, including the following:

Premiums and deductibles

The 2024 Part D national base beneficiary monthly premium is $34.70. Most beneficiaries who qualify for full Extra Help won’t pay a monthly premium or annual deductible. Those who qualify for partial Extra Help will pay a reduced monthly premium and deductible.

Copayments

Those who qualify for Extra Help should not pay more than $4.50 for a generic drug and $11.20 for a brand-name drug in 2024. 

Extra Help also covers the Medicare “donut hole,” a phase in Part D prescription drug coverage in which beneficiaries pay a greater share of a drug’s cost. In standard Medicare Part D plans, once a beneficiary reaches their initial coverage limit ($5,030 in 2024) in total drug costs (what both the beneficiary and the Part D plan pay for the medication combined), he or she is in the coverage gap and responsible for 25% of all generic and brand-name drug expenses until they have spent $8,000. Extra Help, however, eliminates these costs in the “donut hole” too. 

RELATED: Do Medicare Advantage plans have a donut hole?

Late enrollment penalties

Extra Help also provides a Special Enrollment Period for Part D plans once per calendar quarter (during the first nine months of the year) and eliminates Part D late enrollment penalties.

How to qualify for Medicare Extra Help

Not everyone is eligible for Extra Help. To qualify, Medicare beneficiaries must: 

• Reside in the United States and be enrolled in or eligible for a Part D prescription drug plan.
• Meet the resource limits. For 2024, the Extra Help resource limits are $17,220 for an individual or $34,360 for a married couple living together. “Resources” means bank accounts, real estate other than the primary residence, stocks, bonds, mutual funds, IRAs, and cash. This does not include primary residences, vehicles, personal possessions, life insurance policies, and burial expenses. 
• Meet the income limit for Medicare Extra Help. The Medicare Extra Help income limits for 2024 are annual incomes below $22,590 for individuals or $30,660 combined for married couples. In this case, income does not include food stamps, housing assistance, home energy assistance, medical treatment and drugs, disaster assistance, tax credit payments, assistance from others, victim’s compensation payments, scholarships, and education grants. Beneficiaries who earn more can still qualify if they:
  • Support other family members who live with them
  • Have other earnings from work
  • Live in Alaska or Hawaii

Additionally, anyone with Medicare who has already qualified for Medicaid, a Medicare Savings Program, or Supplemental Security Income (SSI) is automatically eligible and does not need to apply separately for Extra Help. If you happen to live in a state with no asset test (or asset limit) for the Medicare Savings Program, you might then qualify for Extra Help automatically, even if your resources are above the Extra Help asset limit. See this instruction document from Social Security for more information on eligibility.

Minus the exceptions listed above, beneficiaries who exceed the resource and Medicare Extra Help income limits will not qualify for Extra Help. It’s possible to apply and qualify for Extra Help before enrolling in Medicare prescription drug coverage, but the assistance won’t take effect until there’s a drug plan in place. In this instance, you will be facilitated automatically into a benchmark Part D plan if you do not already have one. If you would like to switch plans after you are automatically facilitated into one, you will have an opportunity to do so once your Part D coverage takes effect.

How to apply for Extra Help

Your go-to form is the Medicare Extra Help application (Form SSA-1020). You can apply online or at any local Social Security office. It’s also possible to apply over the phone by calling the Social Security Administration phone number at 1-800-772-1213 toll-free (TTY users can call 1-800-325-0778 instead). 

Social Security will review the application and inform the applicant of their eligibility. If they don’t have one already, the applicant must choose a Medicare prescription drug plan, or the Centers for Medicare & Medicaid Services will assign one automatically. The easiest way to enroll in a plan is through medicare.gov or by calling 1-800-MEDICARE.

However, the Extra Help application isn’t the only necessary document. It’s important to keep other information on hand, suggests Urvish Patel, MD, a research associate in Creighton University’s Department of Neurology. He recommends gathering information like:

• Bank statements (checking, savings, and certificates of deposit)
• Real estate documents
• Stock, bond, and mutual fund information
• An amount of cash at home

Typically, you will be charged a late enrollment penalty if you did not enroll in Part D when you first became eligible and you did not have “creditable drug coverage,” but any late enrollment penalty would be waived if you qualify for Extra Help. 

Once an individual qualifies, they do not need to reapply each year as long as they continue to meet the eligibility requirements. However, you may be asked to complete a Review of Your Eligibility form. If circumstances change—they lose Medicaid eligibility, their income increases, etc.—they may need to reapply. 

A caregiver or family member can apply for another person. Still, they must answer all the application questions and supply any required verification documents as if the beneficiary were doing it themselves.

Other ways to save with Medicare

Anyone who’s received notice from Social Security that they don’t qualify for Extra Help might be discouraged, but there are other ways to save. Here are a few:

• Choose a plan with the best formulary: Each Medicare Part D plan has its own drug formulary, which ranks drugs in a tier system. The higher the tier, the more expensive the drug. Before you enroll or change your Part D plan, look for a formulary that includes the majority (if not all) of your prescriptions at the lowest tier possible and with the fewest restrictions, such as prior approval or step therapy
• Use generic drugs instead of brand-name ones: Generic drugs are just as good and only a fraction of the price, so they’re much easier on the wallet. Anyone considering making this switch should consult their healthcare provider first. 
• Compare prices: “Some pharmacies sell drugs cheaper than others,” says Dr. Patel. “And you can compare the price using smartphone apps.” Or, search for the desired medication on SingleCare’s website for a list of the most affordable local prices.
• Pharmaceutical assistance programs: Medicare.gov has databases for pharmaceutical companies and states that have programs that help pay for prescription drugs. Some employers may also have assistance programs for employees who need life-saving medications, says Dr. Patel.
• Use SingleCare coupons: SingleCare is available to Medicare beneficiaries and individuals who qualify for Extra Help. With coupons worth up to 80% off and applicable at pharmacies nationwide, it’s a great way to help reduce Part D out-of-pocket costs and make “donut hole” payments more affordable.