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Medicare Part D Drug Benefit May Cut Food Stamps, Other Federal Benefits

Wed, 06/15/2005 - 11:00pm — Karen Stevenson
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The Centers for Medicare and Medicaid Services (CMS) have issued guidance that low-income seniors who apply for the new Medicare Prescription Drug program may get help with drug costs, but could have food stamp and other federal benefits reduced. It appears that recipients will not lose as much in benefits as they gain in reduced medical expenses, but they will not see the net out-of-pocket gain they may have been expecting, and may have a rude shock ahead when they find out their food stamps or other benefits are reduced.

A fact sheet on the interplay of the drug benefit with other federal means-tested programs states that every $1 increase in income from reduced drug costs could reduce food stamp benefits by about $.30, and also reduce HUD housing assistance by another $.30. The increased income could also impact eligibility for Medicaid and Supplemental Security Income (SSI).

The exact impact will vary depending on a variety of factors, so I have reproduced part of a CMS fact sheet on the effect of the drug benefit on food stamps that further explains the effect on food stamps:

Question: Will I lose my food stamp benefits if I apply and qualify for extra help paying for the new Medicare prescription drug coverage?

Answer: With the extra help for Medicare prescription drug coverage, you may see your food stamp benefits go down as you spend less on drugs. Using the extra help means you will have more cash to spend on food and other things that you used to spend on prescription drugs. If you get the $10 minimum food stamp benefit, your benefits may end. However, the extra cash you will have available to spend on food and other things makes up for not getting as much in food stamps.

Question: I'™m receiving food stamps now and have claimed a deduction for my medical costs. Do I have to report a change in my medical expenses if I get extra help?

Answer: No, you don'™t have to report changes in your medical expenses until you file to renew your food stamps. Of course, if your medical expenses go up for any reason, you may report the increased cost at any time.

Question: How might my food stamp benefits be affected if I qualify for extra help?

Answer: Mrs. Smith gets Medicare'™s extra help: her monthly prescription drug bill is $200. Mrs. Smith has Medicare, lives alone, and receives $798 per month in Social Security benefits. She doesn'™t receive Medicaid. She receives both food stamps and HUD housing assistance. She regularly pays $250 monthly for medical expenses, $200 of which is for 3 prescription drugs. Her HUD subsidized rent is $162 a month.

Under the Medicare prescription drug plan, Mrs. Smith will pay no monthly drug plan premium, no deductible, and her co-payments for her 3 prescription drugs total $9. Her monthly medical spending is now $59 ($50 for other medical bills + $9 for drug co-pays) for a monthly savings of $191. Because Mrs. Smith'™s out-of-pocket medical costs have gone down, her food stamps will be $5 less than they were when she paid for all of the cost of her prescriptions out of pocket and her HUD subsidized rent will increase by $57 to $219 a month. Even though her food stamps decreased and her HUD subsidized rent increased, she has $129 more cash in her pocket each month.

Example: Mr. Jones gets extra help, his monthly drug bill is $51. Mr. Jones is just like Mrs. Smith except his monthly drug bill is lower and he does not get HUD housing assistance since he owns his own home. He has Medicare, lives alone, and receives $798 per month in Social Security benefits. He doesn'™t receive Medicaid. He regularly pays $147 monthly for medical expenses, $51 of which is for 3 prescription drugs.

Under the Medicare prescription drug plan, Mr. Jones will pay no monthly drug plan premium, no deductible, and his co-payments for his 3 rescription drugs are $3 each. His monthly medical spending is now $105 $147-$51+$9=$105) for a monthly savings of $42. Because Mr. Jones' out-of-pocket medical costs have gone down, his food stamps will be $17 less than they were when he paid for all of his prescriptions out of pocket. But he still has $25 more cash in his pocket ($42 medical savings less $17 decrease in food stamps).

The Centers for Medicare and Medicaid Services (CMS) have issued guidance that low-income seniors who apply for the new Medicare Prescription Drug program may get help with drug costs, but could have food stamp and other federal benefits reduced. It appears that recipients will not lose as much in benefits as they gain in reduced medical expenses, but they will not see the net out-of-pocket gain they may have been expecting, and may have a rude shock ahead when they find out their food stamps or other benefits are reduced.

A fact sheet on the interplay of the drug benefit with other federal means-tested programs states that every $1 increase in income from reduced drug costs could reduce food stamp benefits by about $.30, and also reduce HUD housing assistance by another $.30. The increased income could also impact eligibility for Medicaid and Supplemental Security Income (SSI).

The exact impact will vary depending on a variety of factors, so I have reproduced part of a CMS fact sheet on the effect of the drug benefit on food stamps that further explains the effect on food stamps:

Question: Will I lose my food stamp benefits if I apply and qualify for extra help paying for the new Medicare prescription drug coverage?

Answer: With the extra help for Medicare prescription drug coverage, you may see your food stamp benefits go down as you spend less on drugs. Using the extra help means you will have more cash to spend on food and other things that you used to spend on prescription drugs. If you get the $10 minimum food stamp benefit, your benefits may end. However, the extra cash you will have available to spend on food and other things makes up for not getting as much in food stamps.

Question: I'™m receiving food stamps now and have claimed a deduction for my medical costs. Do I have to report a change in my medical expenses if I get extra help?

Answer: No, you don'™t have to report changes in your medical expenses until you file to renew your food stamps. Of course, if your medical expenses go up for any reason, you may report the increased cost at any time.

Question: How might my food stamp benefits be affected if I qualify for extra help?

Answer: Mrs. Smith gets Medicare'™s extra help: her monthly prescription drug bill is $200. Mrs. Smith has Medicare, lives alone, and receives $798 per month in Social Security benefits. She doesn'™t receive Medicaid. She receives both food stamps and HUD housing assistance. She regularly pays $250 monthly for medical expenses, $200 of which is for 3 prescription drugs. Her HUD subsidized rent is $162 a month.

Under the Medicare prescription drug plan, Mrs. Smith will pay no monthly drug plan premium, no deductible, and her co-payments for her 3 prescription drugs total $9. Her monthly medical spending is now $59 ($50 for other medical bills + $9 for drug co-pays) for a monthly savings of $191. Because Mrs. Smith'™s out-of-pocket medical costs have gone down, her food stamps will be $5 less than they were when she paid for all of the cost of her prescriptions out of pocket and her HUD subsidized rent will increase by $57 to $219 a month. Even though her food stamps decreased and her HUD subsidized rent increased, she has $129 more cash in her pocket each month.

Example: Mr. Jones gets extra help, his monthly drug bill is $51. Mr. Jones is just like Mrs. Smith except his monthly drug bill is lower and he does not get HUD housing assistance since he owns his own home. He has Medicare, lives alone, and receives $798 per month in Social Security benefits. He doesn'™t receive Medicaid. He regularly pays $147 monthly for medical expenses, $51 of which is for 3 prescription drugs.

Under the Medicare prescription drug plan, Mr. Jones will pay no monthly drug plan premium, no deductible, and his co-payments for his 3 rescription drugs are $3 each. His monthly medical spending is now $105 $147-$51+$9=$105) for a monthly savings of $42. Because Mr. Jones' out-of-pocket medical costs have gone down, his food stamps will be $17 less than they were when he paid for all of his prescriptions out of pocket. But he still has $25 more cash in his pocket ($42 medical savings less $17 decrease in food stamps).