MEDICARE DRUG DISCOUNT CARDS, TRANSITIONAL ASSISTANCE, AND MEDICALLY NEEDY SPEND-DOWN: THE SCOOP ON THE ISSUES
Many people are wondering how the $600 Transitional Assistance (TA) that
low-income people can get with a Medicare discount drug card relates to their
status as "Medically Needy" (Medically Needy refers to people who qualify
for Medicaid due to the high cost of their medical expenses).
Here is our best understanding of the issues at this time.
Medicaid recipients are excluded. Any Medicare beneficiary receiving
Medicaid coverage for prescription drugs is not
eligible for either the discount card or for TA (also referred to as the $600
Medically needy spend-downers are not
excluded. Medicare beneficiaries who are in a Medicaid medically needy spend-down period
can enroll in a card during their spend-down period. And, if they are also eligible for TA (incomes up to $12,569
for an individual or $16,862 for a couple in the continental U.S., slightly
higher in Alaska and Hawaii), they can enroll in both a drug discount card and
TA. Once they are found eligible,
they retain their card and TA throughout the entire period of the Medicare
discount card program (through early 2006, until the Medicare Prescription Drug
Plans become effective), even after they begin to receive Medicaid.
What is a medically needy spend-down period?
In those states that have medically needy programs
(about 36 states do have such programs for the elderly and people with
disabilities), individuals with too much income to qualify for Medicaid under
other eligibility rules and who have high medical expenses can qualify for
Medicaid after they have spent a certain amount of their income on medical
bills. This amount, which is the
difference between the individual’s income and a fixed standard known as the
Medically Needy Income Level (MNIL), is called the medically needy spend-down.
Once individuals demonstrate to the Medicaid agency that they have
incurred medical bills of that amount, i.e., that they all meet their medically
needy spend-down, they are eligible to have Medicaid cover all the rest of their
health care costs that are covered by their states’ Medicaid program for the
duration of the budget period, which is often six months.
When should a medically needy person enroll in the discount card and TA?
Since individuals cannot be receiving Medicaid to enroll in either the
card or TA, they should sign up for both during their spend-down periods, before
they actually qualify for Medicaid.
Is the discount card and TA the right choice for all “spend-downers”?
Not necessarily, at least not the
way the Centers for Medicare and Medicaid Services (CMS) is currently
interpreting the law. CMS says that
the $600 TA credit will not count toward spend-down. Having
the credit will, then, delay an individual’s entitlement to full Medicaid
coverage. That might not be a problem if the person’s only need for
Medicaid coverage were prescription drugs.
If, however, an individual is relying on Medicaid for other purposes,
such as to pay for a personal care attendant, the delay in receiving full
Medicaid will be a disadvantage.
Here’s an example.
Ms. Hernandez lives in a state with
a 6-month budget period for spend-down, and her income is above Medicaid
medically needy guidelines by $700 for that 6-month period.
Ms. Hernandez has recurring expenses of $150/month for personal care and
$200/month for drugs. Without a discount card and credit, she meets her Medicaid
spend-down after two months and then Medicaid pays for her drugs and personal
care for the next four months. When
possible, she also schedules her visits to her doctor for months when she has
full coverage. With a drug credit,
if CMS does not permit her to use the drugs covered by the credit towards her
spend-down, she will use her credit for the first three months and thus incur
medical expenses of only $450 during those three months for personal care
($150x3=$450). The next month,
since her credit will be used up, she will again have to pay for drugs and she
will meet her spend-down. Over the
six-month period, she will be responsible for the same amount of her medical
expenses regardless of whether or not she has the card.
The card is, therefore, of no benefit to her.
The consequence of her using the credit is the delay of full Medicaid
What does the law say about TA and medically needy spend-down?
CMS says that since the $600 in
expenses covered by the TA credit are not incurred by the individual (or family
or financially responsible relatives), they do not count toward spend-down.
This interpretation is based on a Medicaid regulation stating that
spend-down is met only by expenses incurred by the individual that are not the
liability of a third party other than a state or local program.
However, the more recently passed Medicare Act of 2003, which authorized
the discount card and the transitional assistance, includes a provision stating
that discounted prices and TA should not
affect an individual’s eligibility for, or
the amount of, benefits from other federal programs.
The delay in Medicaid eligibility occasioned by not counting the $600
credit toward spend-down clearly affects the amount of Medicaid benefits
available to the medically needy individual.
Stay tuned. Advocates are continuing an ongoing conversation with CMS concerning interpretation of these provisions of the law. In the meantime, medically needy individuals should weigh carefully the advantages and disadvantages of the discount card and transitional assistance.
© Copyright, Center for Medicare Advocacy, Inc.