Low-income seniors may literally have to choose between food or prescription drugs under the new Medicare prescription drug benefit, even if they have never done so before. Extra financial assistance to cover their prescription drugs is available to help low-income Medicare beneficiaries afford a new drug plan, but the Department of Health and Human Services (HHS) says that beneficiaries who receive the assistance may see a reduction in their food stamps, as well as federal HUD housing assistance.

But don't give up too quickly because you could still come out ahead.

The Social Security Administration (SSA) estimates that the extra assistance could provide about $2,100 to Medicare beneficiaries with low incomes in 2006. The additional assistance, depending on your income and assets level, will cover either all or part of the premium, deductible and co-payments for the Medicare drug benefit.

According to the government tip sheet, if you qualify for the extra assistance, "you will have more cash to spend on food and other things that you used to spend on prescription drugs. If you only get a $10 minimum food stamp benefit now, your benefits may end. However, the extra cash you will have available makes up for not getting as much in food stamps, " a government tip sheet says.

To qualify for the additional assistance, individuals must have annual incomes below $14,355 and resources valued below $10,000. Couples may have a combined annual income of less than $19,245 and $20,000 in resources.

• the value of your primary residence
• your vehicles
• your household goods and personal possessions
• resources you could not easily convert to cash, such as farm machinery and livestock, jewelry and home furnishings
• federal income tax refunds
• property you need for self-support, such as rental property
• life insurance polices with a combined face value of $1,500 or less ($3,000 couples).

The tip sheet illustrates the offsetting reductions to the new Medicare benefit using the following example: Mrs. Smith has Medicare, lives alone and receives a monthly Social Security benefit of $798. She doesn't receive Medicaid, but she does receive both food stamps and HUD housing assistance. She regularly pays $250 per month for medical expenses, including $200 for prescription drugs. Her monthly HUD rent is $162.

Comparison of Spending on Medicare Rx Drugs With and Without Extra Help

	Without the Extra Help	With Extra Help	Difference
Income	$798	$798
Food Stamps	+            $15	+            $10	Decrease of $5
Medical Spending	-          $250	-            $59	Decrease of $191
Rent Payment**	-          $162	-          $219	Increase of $57
Net Balance Remaining	$401	$530	Increase of $129

*$10 is the minimum monthly benefit for eligible people living alone.
** Rent payment reflects rent as 30% of adjusted income.

Qualifying for the assistance is only half of the process; you will still need to shop for and enroll in a prescription drug plan to receive this benefit starting November 15, 2005.

Senior advocates including TSCL are encouraging seniors not to be deterred from applying for the benefit, but to exercise prudence in weighing the costs and benefits. "Even though this mean-spirited aspect of the new drug benefit breaks the promise that seniors should not have to choose between food or their prescription drugs, we encourage seniors to apply for the additional assistance, " says Shannon Benton, Executive Director of TREA Senior Citizens League. "We also urge seniors who currently receive food stamps and other benefits to ask for an estimate of how much their other benefits may be reduced if they enroll. Seniors need full information to determine whether the Medicare drug assistance delivers a real benefit, or just another broken promise."

Sources: "Food Stamps and New Medicare Prescription Drug Coverage," HHS, CMS, May 25, 2005. "Five Tips on Getting Extra Help to Pay for the New Medicare Drug Benefit," Medicare Rights Center, July 8, 2005, "On Medicare? You May Qualify for Extra Help to Pay for Prescription Drug Costs," The Social Security Administration, August 8, 2005.

October 2005