Pakistani American Pharmaceutical Association

If you have Medicare and are eligible for

Medicaid because of high medical expenses, you

need to know

1. Starting January 1, 2006, Medicare prescription drug

coverage will be available to everyone with Medicare.

2. You may qualify for extra help paying for a Medicare

prescription drug plan.

3. You won’t lose your Medicaid if you qualify for this

extra help.

4. Even if you don’t qualify for extra help, you

should join a Medicare prescription drug plan by

May 15, 2006.

1. What is a Medicare prescription drug plan?

Starting January 1, 2006, Medicare prescription drug

coverage will be available to everyone with Medicare.

Medicare prescription drug plans provide insurance

coverage for prescription drugs. These plans will be

offered by insurance companies and other private

companies, and will cover both generic and brand-name

prescription drugs. You can choose a plan that meets

your needs.

There are two types of Medicare prescription drug

plans. There will be prescription drug plans that add

coverage to the Original Medicare Plan. There will also

be prescription drug coverage that is part of Medicare

Health Plans (Medicare Advantage and Medicare Cost

Plans). You would get all of your Medicare health care

through these plans.

Even if you don’t use a lot of prescription drugs now,

you should still consider joining a Medicare

prescription drug plan. Research shows that as we age,

most people need prescription drugs to stay healthy. For

most people, joining now means you will pay a lower

monthly premium than if you wait to join until later.

You can join a plan beginning November 15, 2005.

2. Do you qualify for extra help paying

prescription drug costs?

You automatically qualify for extra help if:

■ you have Medicare and Medicaid, or

■ you have Medicare and SSI, or

■ you have Medicare and a Medicare savings program

(extra help from your state paying Medicare

premiums and/or cost-sharing such as QMB, SLMB,

or QI).

Starting in May 2005, Medicare will send a letter to all

people with Medicare who are automatically eligible to

receive extra help. If you receive this letter, you do not

need to apply for the extra help. Other people who are

not automatically eligible, but may qualify, will get a

different letter from the Social Security Administration

telling them how they can apply for the extra help

3. Will I lose Medicaid if I also qualify for extra

help paying Medicare prescription drug plan

costs?

No. However, if you “spend down” to Medicaid because

you have high drug costs, you may find that Medicare

covers your drug spending and you no longer “spend

down” as quickly to become Medicaid-eligible.

Under the “spend down” process, you may become

eligible for Medicaid even if you have too much income

to qualify otherwise. This option allows you to “spend

★ 1 ★

down” to Medicaid eligibility by having medical

expenses that can be subtracted from your income.

Subtracting the medical expenses (such as prescription

drugs, eyeglasses, etc.) from your income can reduce

your income to a level below the maximum allowed by

your state’s Medicaid plan.

Once you start receiving Medicare prescription drug

coverage and, if you qualify, the extra help paying for

it, your out-of-pocket expenses for prescription drugs

will be reduced, leaving you with more available

income. Your reduced payments for prescription drugs

will in turn reduce the amount of medical expenses you

can have deducted from your income. This means your

need for Medicaid may be reduced. However, you don’t

lose your ability to rely on Medicaid in months when

you have greater medical expenses.

Note: Medicare doesn’t expect extra help eligibility to

affect Medicaid coverage for people in nursing homes,

because they will continue to have nursing home costs

and will therefore have high medical expenses each

month, even if Medicare is paying for their

prescription drugs.

How does qualifying for extra help affect whether I

qualify for Medicaid because of high medical expenses?

Example: Rebecca 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 currently pays

$150 a month out-of-pocket for 10 prescription drugs,

and $75 every month for visits to her doctors for a total

of $225 per month. After she spends $200 on medical

bills, she qualifies for Medicaid, which pays the

additional $25 of her medical expenses, leaving her

with $500 for other expenses.

If Rebecca receives Medicaid she automatically

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