More Medicare beneficiaries will qualify for “Extra Help” with their prescription drug costs, and be eligible to pay no more than $2.50 for generic drugs and $6.30 for each brand name drug thanks to changes to Medicare’s Low-Income Subsidy Program (also known as LIS or “Extra Help”) that take effect this year. These changes make it easier than ever for people on Medicare with limited incomes to save on their drug costs.

The Centers for Medicare & Medicaid Services estimates that “Extra Help” can save eligible Medicare beneficiaries as much as $3,900 per year. It is estimated that more than 1.8 million people with Medicare may be eligible for “Extra Help,” but are not currently enrolled to take advantage of these savings.

Changes in the law enacted in the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 make it easier for Medicare beneficiaries to qualify for “Extra Help” by changing the way income and assets are counted in 2010. When determining eligibility for “Extra Help,” the Social Security Administration, who handles enrollment in the program, will no longer count life insurance policies as a resource. In addition, help received from family and friends to pay for household expenses like food, mortgage, rent and utilities will no longer count as income.

“These changes to the ‘Extra Help’ program make it easier for more people to get help paying for their prescription drugs,” said Marilyn Tavenner, CMS Principal Deputy Administrator. “Even if you were turned down for ‘Extra Help’ before, you should reapply. If you qualify, you will receive help paying for Medicare prescription drug coverage premiums, copayments and deductibles.”

To qualify, Medicare beneficiaries’ incomes must be less than $16,245 a year (or $21,855 for married couples) and have resources limited to $12,510 (or $25,010 for married couples). Resources include bank accounts, stocks, and bonds, but do not include houses, cars, or life insurance policies.

There is no cost to apply for “Extra Help.” Medicare beneficiaries, family members, trusted counselors or caregivers can apply online at www.socialsecurity.gov/prescriptionhelp or call Social Security at 1-800-772-1213 (TTY users should call 1-800-325-0778) and ask for the Application for Help with Medicare Prescription Drug Plan Costs.

Medicare beneficiaries can also receive assistance in their local communities from their State Health Insurance Assistance Program (SHIP). Local SHIP contact information can be found on the back of the Medicare & You 2010 handbook, or online at www.medicare.gov/contacts/staticpages/ships.aspx. All the information you give is confidential.

Most beneficiaries enrolled in a Part D plan whose income is too high to qualify for the “Extra Help,” but who enter the donut hole in 2010, will receive a one-time, tax-free rebate check of $250 to help out with high prescription drug costs thanks to the Affordable Care Act. The new law contains some important new benefits to help seniors and others who are caught in the coverage gap. To learn more about the Affordable Care Act and these new benefits through Medicare, visit http://www.medicare.gov/Publications/Pubs/pdf/11467.pdf

These $250 checks will begin to get mailed out to eligible beneficiaries on June 10 and will be sent to beneficiaries soon after they enter the coverage gap. For more information on how to get your rebate check, log on to http://www.medicare.gov/Publications/Pubs/pdf/11464.pdf. (See article below also.)

The donut hole is the period in the prescription drug benefit in which beneficiaries generally pay 100 percent of the cost of their drugs until they hit the catastrophic coverage. Beneficiaries who qualify for Medicare “Extra Help” do not have a donut hole.

To learn more about Medicare prescription drug coverage, visit www.medicare.gov, or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.