Subsidies for the cost of Medicare Part D prescription coverage will not help low-income people with modest savings.

Older Americans, with low-incomes, may be forced to spend their modest life savings if they become ill. A study reported in the American Journal of Managed Care finds serious questions about the equity of a subsidy for the costs of Medicare Part D.

In 2006, a Medicare Part D beneficiary who spends $5000 for covered drugs will pay $3500 out-of -pocket expenses, not including a premium averaging $420 per year. A low-income subsidy is available but the asset threshold means many people whose savings are less than the cost of one year in a nursing home will not be eligible for this assistance.

Half of those who fail the asset test have savings or other assets of $35000 or less. They are far more likely to be older, female and living alone. Fifty-five percent of those ineligible due to assets are aged 75 and older. The assets that make them ineligible for the subsidy are likely to be money in a checking or savings account (44%). Only 16% of these assets were in real estate (other than a home which is not counted).

The subsidy program for Medicare Part D will provide substantial help to those who are eligible. The Centers for Medicare and Medicaid estimated that beneficiaries who receive the subsidy will pay $170 dollars out-of-pocket for medicine compared to $1122 for those people with it - plus a savings of $440 for premiums.

READ THE FULL REPORT

Created 2/16/06