Extra Help With Part D Costs: Who Qualifies for the Low-Income Subsidy

What Extra Help Actually Is

Extra Help is not a separate insurance plan. It is a subsidy that sits on top of Medicare drug coverage. You still need to be in a Medicare drug plan, either a stand-alone Part D plan or a Medicare Advantage plan that includes drug coverage. Extra Help then pays part or all of the plan’s monthly premium, removes or reduces the deductible, and lowers what you pay at the pharmacy counter.

The program was created along with Part D itself and is paid for by the federal government. Social Security (SSA) takes applications for it, and people who already get certain other benefits are enrolled automatically, as we’ll explain below. It is not a loan, and you do not pay it back.

One point that surprises people: because the subsidy is tied to your drug plan, your overall costs also depend on which plan you are in. Extra Help covers the premium only up to a benchmark amount that Medicare sets each year for your region. Plans priced at or below that benchmark can be premium-free to you. A plan priced above it may leave you with a small balance. We come back to this in the section on choosing a plan.

Two Ways You Can Qualify

There are two doors into Extra Help, and it helps to know which one you are standing in.

Automatic qualification. If you already get help from another program, Medicare generally enrolls you in Extra Help without a separate application. This applies to people who:

• Have full Medicaid coverage
• Receive Supplemental Security Income (SSI)
• Are enrolled in a Medicare Savings Program, which helps pay Medicare premiums and sometimes other costs

People in these groups are described as “deemed” eligible. You should receive a notice from Medicare telling you that you have Extra Help. If you think you should have it and never received anything, call 1-800-MEDICARE or your state Medicaid office to check. Our guide to the Medicare Savings Programs explains how that related program works.

Applying on your own. If you do not receive any of those benefits, you can apply directly with Social Security. To qualify, you must have Medicare Part A or Part B, live in one of the 50 states or the District of Columbia, and have income and resources below the program’s limits.

The Income and Resource Tests

Extra Help has two financial tests: one for your income and one for your resources, meaning what you own. Both reset each year, which is why we do not print the dollar limits here. SSA publishes the current figures, and the numbers are higher for married couples living together than for single applicants. Income limits are also somewhat higher in Alaska and Hawaii.

Here is how the two tests work in structure:

• Income: The income limit is tied to the federal poverty level, set at a percentage above that level and updated every year. Your income generally includes Social Security, pension payments, wages and certain other money you receive. If you are married and live with your spouse, your spouse’s income is counted along with yours.
• Resources: Resources are things like checking and savings accounts, certificates of deposit, stocks, bonds, mutual funds, retirement accounts such as IRAs, and real estate other than the home you live in.

Just as important is what does not count as a resource. SSA does not count the home you live in, your vehicles, your personal possessions, life insurance policies, burial plots, or burial expenses, and it also leaves out certain other items, such as property you need for self-support. That means a person who owns a house and a car can still qualify so long as their savings and investments stay under the limit.

Two cautions. First, the figures are applied strictly, and being a little over either limit generally means you do not qualify for that year. Second, the limits move. Someone turned down in one year can be eligible the next, so it can be worth reapplying after a change in your finances, such as a spouse passing away, a drop in income, or a large medical expense that reduces your savings.

What Changed in 2024

Before 2024, Extra Help had a full subsidy and a partial subsidy. People with somewhat higher income or resources got the partial version, which still left them with a deductible and a percentage of drug costs to pay. Starting January 1, 2024, the Inflation Reduction Act removed that split. Everyone who qualifies for Extra Help now gets the full subsidy.

People who previously received partial help moved up to full help. If you looked into Extra Help several years ago and were told you did not qualify, or qualified only for a partial amount, it is worth checking again, since the rules changed and the limits are updated every year.

What Extra Help Pays For

Cost	With Extra Help
Part D premium	Paid up to the regional benchmark amount
Part D deductible	Waived
Prescription copays	Small set amounts; zero in the catastrophic phase
Late enrollment penalty	Waived
Part B or Medigap premium	Not covered by Extra Help

With Extra Help, you generally get the following:

• Premiums: Your monthly Part D premium is covered up to the regional benchmark amount, so many people in a benchmark plan pay no premium.
• Deductible: The Part D deductible is waived.
• Copayments: You pay a small, set copayment on each prescription, with a lower amount for generics than for brand-name drugs. The exact copay amounts are updated each year, and some people, including certain people with full Medicaid in long-term care, pay nothing.
• No late enrollment penalty: The Part D late enrollment penalty is waived for people who have Extra Help.
• No cost once you hit the cap: Once your out-of-pocket drug spending reaches the annual Part D cap, your copay drops to zero. You can read more about how the annual cap works in our post on the Part D out-of-pocket cap.

Medicare’s own materials note that people with Extra Help pay less than the insulin cap that applies to everyone else, which makes the program especially valuable if you take insulin.

What Extra Help does not do: it does not pay your Part B premium, it does not pay a Medigap premium, and it does not cover drugs that your plan does not cover. If your medicine is not on your plan’s formulary, the subsidy does not change that. That is why checking your drug list matters even when your premium is zero. We cover that process in our post on formulary changes.

How to Apply

The application takes less time than most people expect. You can apply in one of three ways:

• Online with the Social Security Administration
• By phone, at 1-800-772-1213 (TTY 1-800-325-0778)
• In person at your local Social Security office

You will be asked about your income, your savings and investments, and your household. Have recent statements for bank accounts and any investments handy, along with your Medicare number. You do not need to sell anything to apply. SSA compares your answers with data from other government agencies, so it may follow up if something does not match.

SSA reviews your application and mails you a decision letter. If you are approved, you can choose a drug plan, and if you do not choose one, Medicare will pick one for you. If you are denied, you have the right to appeal. You have 60 days from when you receive the notice to ask for an appeal, using SSA’s appeal form (SSA-1021). You can also reapply any time your situation changes.

If you want free, unbiased help with the application, your State Health Insurance Assistance Program (SHIP) offers one-on-one counseling. In Ohio that program is OSHIIP, run through the Ohio Department of Insurance. Other states have their own versions.

Choosing and Changing Plans While You Have Extra Help

Extra Help comes with flexibility that other Medicare enrollees do not have. Since January 2025, people with Extra Help have a monthly special enrollment period. Once a month, you can switch to a different stand-alone Part D plan, or return to Original Medicare with a stand-alone drug plan. The change takes effect the first of the following month. That is a significant improvement over the older rule, which allowed changes only once a quarter.

A few practical points follow from this:

• If you applied for Extra Help and were not in a drug plan, Medicare may place you in a benchmark plan automatically. You are generally allowed to choose a different one. Do not assume the plan you were assigned covers your drugs or includes your pharmacy.
• If your plan’s premium rises above the benchmark for the coming year, Medicare may reassign people who were placed in that plan automatically to a lower-priced plan. Read any letter you get in the fall rather than setting it aside, because it may change your plan for January 1.
• If you are in a Medicare Advantage plan with drug coverage, the monthly option can be used to leave that plan for Original Medicare and a stand-alone drug plan, but not to join an Advantage plan. Leaving also ends the plan’s medical coverage, so ask before you act.
• Switching from a Medicare Advantage plan to Original Medicare with a drug plan may affect your ability to buy a Medigap policy later, depending on your state and your health. We explain those rules in our guide to Medigap open enrollment.

You can also still use the annual window each fall, October 15 through December 7. Our overview of the annual enrollment period lays out what you can and cannot change then.

Keeping Extra Help From Year to Year

Extra Help is not permanent. Eligibility is reviewed, and if you qualified by applying with SSA, you may be asked to confirm your income and resources again. According to SSA, these reviews are usually done in late summer, you have 30 days to return the form, and any change takes effect the following January. If SSA sends a review form, answer it promptly. If you do not return it, your Extra Help will stop the following year, and with it comes a surprise premium and copay bill.

People who qualify automatically can lose that status if they stop qualifying for the program that granted it. Generally, someone who is deemed eligible keeps Extra Help through the end of that calendar year even if they lose Medicaid, SSI, or Medicare Savings Program status partway through, and federal rules extend that through the following calendar year for people who were deemed eligible for any month from July through December. If you stop qualifying automatically, Medicare sends a gray notice, usually in September, explaining that you no longer automatically qualify for the coming year. If you receive that notice, you may still qualify by applying directly with SSA. Do not wait until January to find out.

Common Misunderstandings

A few ideas keep people from applying:

• “I own my home, so I cannot qualify.” Your primary residence is not counted as a resource.
• “I make too much because of Social Security.” The limit is tied to the poverty level, and it changes yearly. Check the current limit rather than relying on what you heard a few years ago.
• “I will have to pay it back.” Extra Help is a subsidy, not a loan.
• “It will mess up my other benefits.” Extra Help is a separate drug-cost subsidy. If you are unsure how applying fits with Medicaid or other benefits you receive, ask your state Medicaid office or your SHIP counselor before you apply.

Step by Step: Applying for Extra Help

If you decide to apply, a short checklist makes it go faster.

Step 1: Check whether you already have it. If you have full Medicaid, SSI or a Medicare Savings Program, you probably do. Look for the notice from Medicare, or ask your drug plan.

Step 2: Gather what you need. Have your Medicare number, recent bank and investment statements, and information about your household’s income. If you are married and living with your spouse, you will need their information as well.

Step 3: Choose how to apply. You can apply online, by phone at 1-800-772-1213, or in person with Social Security. If you want help, a State Health Insurance Assistance Program counselor can walk you through it.

Step 4: Answer carefully. Include all resources the form asks about, and leave out only what is not counted, such as your home and car.

Step 5: Watch your mail. SSA will mail you a decision letter. Keep it.

Step 6: Check your drug plan. Once approved, confirm that your plan reflects the subsidy, that your premium is what you expect and that your drugs and pharmacy are covered.

Step 7: Revisit your plan choice. Because you have a monthly option to change drug plans, look at whether a different plan covers your medicines better.

How Extra Help Works Across Coverage Types

Extra Help sits on top of drug coverage, so how it plays out depends on what else you have.

• Original Medicare with a stand-alone drug plan. This is the most straightforward case. The subsidy applies to the drug plan’s premium up to the benchmark, its deductible and its copays.
• Medicare Advantage with drug coverage. Extra Help applies to the drug portion of the plan. Your medical copays, network and approval rules are unchanged.
• Original Medicare with Medigap. Medigap does not cover prescriptions, so you still need a drug plan. Extra Help applies to that drug plan, not to the Medigap premium.
• With Medicaid or a Medicare Savings Program. You are generally enrolled automatically, and other help may apply to Medicare costs. A Dual-Eligible Special Needs Plan may be an option.
• With employer or retiree drug coverage. Ask the benefits office before changing anything. Dropping that coverage to join a Medicare drug plan can have consequences, and a spouse’s coverage may be affected.
• For veterans and military retirees. VA and TRICARE pharmacy benefits work differently from Part D. We’re an independent agency, not affiliated with the VA, TRICARE, or the Department of Defense, so confirm with them how their coverage coordinates with Medicare drug coverage.

Hypothetical Situations

Picture a retiree with a modest pension and a small savings account who owns their home. Their house and car do not count as resources, so they may qualify even though they feel they have too much. Checking the current limits takes only a few minutes.

Picture a widow whose income dropped after her spouse died. Because the limits for married couples and single people differ, her eligibility may have changed. A new application may be worthwhile.

Picture someone who qualified through Medicaid and then lost it. They may keep Extra Help for the rest of the calendar year, or longer depending on when they were deemed eligible, but should not wait for the notice that ends it. They can apply directly with Social Security to see whether they qualify on their own.

Common Costly Mistakes

• Not applying because of the house or car. They are not counted.
• Assuming an old denial still applies. The limits change yearly, and so may your situation.
• Ignoring review forms. A missed form can end the subsidy.
• Choosing a plan on premium alone. Make sure your drugs and pharmacy are covered.
• Not reading plan letters in the fall. Reassignment to a different plan can change your coverage.
• Confusing Extra Help with help paying the Part B premium. They are different programs.

If Your Application Is Denied or Something Goes Wrong

• You are denied. The letter explains why and describes your right to appeal. According to SSA, you have 60 days from the date you receive the notice to request an appeal, so read it right away. You can also reapply if your income or savings change.
• Your pharmacy charges more than you expect. Ask the pharmacist to check your Extra Help status. If your plan does not show it, call the plan and 1-800-MEDICARE.
• You think you should have been enrolled automatically. Call 1-800-MEDICARE or your state Medicaid office to check.
• You received a loss-of-eligibility notice. Contact Social Security about applying on your own, and ask your State Health Insurance Assistance Program for help.

Before calling, gather your Medicare number, plan card, any Extra Help letters and your latest bank statements. Note the date and the person you spoke with.

Frequently Asked Questions

Can I get Extra Help if I have a Medicare Advantage plan?

Yes. Extra Help applies to the prescription drug coverage in a Medicare Advantage plan that includes drug coverage, as well as to stand-alone Part D plans. It does not change the medical side of the Advantage plan.

Does owning a house or a car disqualify me from Extra Help?

No. SSA does not count the home you live in or your vehicles toward the resource limit. It does count savings, investments, retirement accounts, and real estate other than your primary home.

How do I know if I already have Extra Help?

If you have full Medicaid, SSI, or a Medicare Savings Program, you probably do. Medicare sends a notice confirming it, and your drug plan can verify your status. You can also call 1-800-MEDICARE.

Can I apply for Extra Help at any time of year?

Yes. You can apply with Social Security at any time and are not limited to the fall enrollment season. If approved, you will generally be able to use the monthly special enrollment period to change drug plans.

Does Extra Help cover my Part B or Medigap premium?

No. Extra Help applies only to Part D costs. Part B premium help comes from a Medicare Savings Program, and Medigap premiums are paid by you.