Medicare Extra Help is a subsidy program that's designed to assist eligible Medicare recipients with paying for their prescription drug costs. Some people who have Medicare Part D qualify for Extra Help benefits automatically. Those who don't qualify automatically can still apply and eligibility is determined based on their income and assets. Before filling out the application, it's important to understand the Medicare Extra Help income limits for 2022. If you have questions about how Medicare Extra Help could impact your retirement, consider speaking with a financial advisor.
What Is Medicare Extra Help?
Medicare Extra Help is a subsidy program that's designed for certain Medicare recipients who have Part D drug coverage. This program can help to:
Reduce your out-of-pocket costs for prescription drugs
Eliminate Medicare Part D premiums
Reduce or eliminate your annual Medicare Part D deductibles
Eliminate the Medicare donut hole or coverage gap
Avoid the late enrollment penalty
The program can drastically reduce what you pay for prescriptions. People enrolled in Extra Help will pay no more than $3.95 for generic prescription drugs and $9.85 for brand-name drugs in 2022. The Social Security Administration estimates that Extra Help benefits are worth approximately $5,100 per year on average.
2022 Income Limits for Medicare Extra Help
Medicare Extra Help eligibility is based on someone's income and the financial resources they have available to help pay for Medicare prescription drug costs. The limit that applies to you can depend on whether you're married or not.
Below is a breakdown of how the Medicare Extra Help income limits for 2022 add up. Note that the resource limits do not include a $1,500 per person burial exclusion.
Single person: Yearly income less than $20,385 ($1,699 monthly) and less than $15,510 in resources annually
Married person: Yearly income less than $27,465 ($2,289 monthly) and less than $30,950 in resources annually
It's possible to qualify if your income is above the Medicare Extra Help income limits for 2022. There may be higher income allowances for people who are still working, have dependents who live with you or live in Alaska or Hawaii. You can check with your local social services office or Social Security to discuss options.
Certain types of income are also excluded from calculations for Extra Help eligibility for nine months. That includes:
Supplemental Nutrition Assistance Program (SNAP) benefits
Housing assistance benefits
Home energy assistance
Assistance with medical treatment and drugs
Earned income tax credit payments
Assistance from others to pay household expenses
Victim's compensation payments
Scholarships and education grants
You can also follow up with Social Security to ask about any other income exclusions that may apply. The more types of income you can exclude, the easier it may be to qualify for Medicare Extra Help under the 2022 income limits. Aside from income, the types of resources Medicare considers for Extra Help eligibility include:
Taxable investment accounts
Certain resources are excluded. For example, Medicare doesn't look at the value of your home, household items, vehicles, life insurance policies or money that's set aside for burial expenses when calculating your resources.
These types of resources are not counted for nine months:
Retroactive Social Security or Supplemental Security Income (SSI) payments
Housing assistance payments
Tax advances and refunds for earned income and child tax credits
Compensation paid to you as a crime victim
Relocation assistance received from a state or local government
Similar to income, you can check with Social Security to see what other exclusions may apply.
Who Automatically Qualifies for Medicare Extra Help?
Some people may be eligible to receive Medicare Extra Help, regardless of income. You may qualify for prescription drug help automatically if you:
Have full Medicaid coverage
Get help from your state Medicaid program paying Medicare Part B premiums
Receive Supplemental Security Income benefits
People who qualify for Extra Help automatically receive the same prescription drug benefits as those who qualify based on income.
How to Apply for Medicare Extra Help
To take advantage of Medicare Extra Help benefits you must be enrolled in a Medicare Part D prescription drug program. You could technically apply for Extra Help if you're not enrolled in Part D coverage yet. But if approved, your benefits wouldn't kick in until you have prescription drug coverage in place.
You can apply for Extra Help online if you:
Are enrolled in Medicare Part or Medicare Part B
Live in one of the 50 states or the District of Columbia
Have combined financial resources of $15,510 or less if you're not married or don't live with your spouse and $30,950 if you are married and live with your spouse (not including the $1,500 burial exclusion)
You don't need to fill out the online application if you have Medicare and Medicaid or have Medicare and receive SSI benefits. In that case, you should receive a letter explaining that you're automatically approved for Medicare Extra Help.
If you're not able to submit an application for Extra Help online, you can apply over the phone by calling Social Security at 1-800-772-1213. You also have the option to submit a paper application by mail or visit your local Social Security office to apply, though you may need to have an appointment for that.
Here are the documents Social Security suggests collecting before you apply:
Social Security card
Bank account statements
Statements for IRAs and other investment accounts
Your most recent Social Security benefits award letter or statements for Railroad Retirement benefits, Veterans benefits, pensions and annuities
If you don't have those documents, you'll need to give Social Security the best estimate of your income.
Assuming you're approved for Medicare Extra Help, you'll be subject to a periodic eligibility review. This review is used to ensure that you're still eligible for help, based on your income and financial resources.
If you're denied for Extra Help based on your income or resources, you can file an appeal. There's a specific Social Security appeal form you'll need to file out and send in. You can request a hearing by phone to have Social Security reconsider your eligibility.
Medicare Extra Help can be a valuable addition to your Medicare coverage if you struggle with covering the cost of prescription drugs. Understanding the Medicare Extra Help income limits for 2022 matters if you're planning to apply for benefits. Just keep in mind that the income limits for eligibility are updated periodically. So the Medicare Extra Help income limits for 2022 may not be the same as the Medicare Extra Help income limits in 2023 and beyond.
Retirement Planning Tips
Consider talking to a financial advisor about Medicare enrollment, Extra Help and how to pay for health care costs not covered by Medicare, such as long-term nursing care. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
Medicare eligibility begins in the year you turn 65. Once you're enrolled in Medicare, you have the option to change your coverage each year during the annual open enrollment period. For example, you may decide to switch to a Medicare Advantage plan if you're already enrolled in Original Medicare or add Part D coverage. Comparing plan costs and coverage can help you decide which Medicare option may work best for you, based on what you need and what you can afford to pay.
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