Benefits from Medicare approved drug discount cards won't affect Medicaid benefits

Low-income Medicare beneficiaries who qualify for the $600 credit when they enroll in a Medicare-approved drug discount card will not have to worry that this help will be counted against them when they apply for Medicaid or other federal government benefit programs like housing and food stamps.

This reaffirmation of policy came in an announcement today by the Centers for Medicare & Medicaid Services (CMS) and the Office of Management and Budget (OMB).

“As the Medicare law intended, low-income beneficiaries don’t need to worry that government help from one program will take away help from another,” said HHS Secretary Tommy G. Thompson. “As a result of the new law, low-income Medicare beneficiaries need not have to chose between food and medicine.”

In a letter to state Medicaid officials, CMS, the agency within HHS that oversees the Medicare and Medicaid programs, cites the new Medicare Modernization Act (MMA) that such benefits “shall not be taken into account in determining an individual’s eligibility for, or the amount of benefits under, any other federal program.”

“No one should be disadvantaged under federal programs, including Medicaid, because he or she is getting some extra help with buying medications that may be critical to their health,” said Mark B. McClellan, M.D., Ph.D., administrator of CMS. “My agency worked closely with OMB to assure that the letter of the new law was closely followed not just by Medicaid, but all other federal aid programs.”

OMB today is sending a memorandum to all federal agencies to ensure that none violate the new MMA rules. Programs like food stamps, subsidized housing and home heating assistance are based on a person’s income and assets and an additional $600 credit available to someone might preclude them from eligibility in such a program or could affect the amount of the benefit they receive until the $600 is exhausted.

Under the new law, Medicaid benefits may not be delayed or disapproved because a beneficiary has a discount drug card that may yield savings on medical expenses. Any discount received and any portion of the $600 credit used must be treated as if the person had actually spent the money out of their own pockets when being evaluated for state “medically needy” program eligibility, CMS’ guidance to states says.

Also, no portion of the $600 credit can be counted as an asset or resource for purposes of Medicaid eligibility. That means that a Medicare beneficiary who has a discount card and is receiving the credit and later applies for Medicaid benefits, does not have to spend the credit before Medicaid will be awarded or pay for prescription drugs.

Because the policy is effective as of June 1, 2004, states will be instructed to reopen cases that may have been decided before the guidance was issued. The policy does not apply to discounts or subsidies received through health insurance or other discount programs like those often offered by drug manufacturers.

Under the MMA, seniors who sign up for the card will see savings of 11 to 18 percent on name brand drugs, 37 percent to 65 percent on generic drugs and up to 40 percent on mail order purchases, compared to the average prices paid by all Americans. Low-income beneficiaries with income of less than $12,569 for singles and $16,862 for couples will also receive a credit of up to $1200 over the next 18 months.

Medicaid is a state/federal partnership program to provide health benefits to certain low-income children, pregnant women, the elderly and those with disabilities. The program covers approximately 41 million Americans and spent $276 billion in fiscal 2003.

The letter to State Medicaid Directors is available at http://www.cms.hhs.gov/states/letters/smd071904b.pdf.