Medicare Part D in 2016 and Trends over Time
Section 4: The Low-Income Subsidy Program
Nearly three in 10 Part D enrollees receive additional financial subsidies for Part D coverage through the Low-Income Subsidy program.
- About 12 million Part D enrollees (29 percent of all Part D enrollees) receive additional subsidies through the Low-Income Subsidy (LIS) program (also called “extra help”) (Exhibit 4.1). The LIS pays Part D premiums for eligible beneficiaries, as long as they enroll in PDPs designated as benchmark plans, and also reduces cost sharing.
- About two-thirds of LIS enrollees (66 percent, or 8 million) are enrolled in stand-alone PDPs; others are in standard MA-PD plans, Special Needs Plans (SNPs), Medicare-Medicaid plans participating in financial alignment demonstrations, cost plans, or PACE plans (Exhibit 4.2). PDP LIS enrollment has been relatively constant since the program began, but MA-PD plan enrollment (including enrollment in SNPs) has more than tripled since 2006.
- The percent of Part D enrollees receiving LIS is higher in some states than others, and tends to be higher in southern states than in other regions of the country (Exhibit 4.3).
- In three states (Arizona, Florida, and Hawaii), more than half of LIS enrollees are in some type of MA-PD plan (Exhibit 4.4). In six states, more than 95 percent of LIS enrollees are in PDPs.
Fewer PDPs qualify as benchmark plans in 2016, compared to any previous year.
- In 2016, 226 PDPs nationwide (about one-fourth of plans) qualify as benchmark plans; that is, plans that are available to beneficiaries receiving the LIS for no monthly premium (Exhibit 4.5). This represents a 20 percent reduction in benchmark plans since 2015. In 2016, the average LIS beneficiary has a choice of seven benchmark plans, fewer than any previous year. About one-fourth of benchmark PDPs in 2016 qualify through a policy that allows plans to waive a premium of up to $2 per month.
- Benchmark plan availability ranges by region in 2016 (Exhibit 4.6). LIS beneficiaries have a choice of 10 benchmark plans in three regions (Arizona, Idaho/Utah, and Pennsylvania/West Virginia), but just two benchmark plans in Hawaii and three in Florida.
Some LIS beneficiaries pay premiums, even though they are eligible for premium-free Part D coverage; of the 1.5 million LIS enrollees paying premiums, close to half pay $20 or more per month.
- In 2016, about 13 percent of all LIS beneficiaries (1.5 million) pay a premium because they are not enrolled in benchmark plans (Exhibit 4.7). CMS reassigns some beneficiaries to a zero-premium PDP during open enrollment if their previous PDP loses benchmark status and charges a premium. But these LIS enrollees are not reassigned by CMS because they have actively selected the plan they are in, whether it is a PDP or an MA-PD plan.
- The number of LIS beneficiaries paying premiums is currently lower than in 2009 and 2010, at least partly because of the policy that allows plans to waive premiums up to $2 per month.
- In 2016, 71 percent of the 1.5 million LIS enrollees who pay a premium for Part D coverage pay $10 or more per month (Exhibit 4.8). Almost half (45 percent) of the 1.5 million LIS enrollees who pay a premium pay $20 or more a month for their Part D coverage.
- On average, the 1.5 million LIS beneficiaries paying Part D premiums in 2016 pay $20.51 per month ($246 per year) (Exhibit 4.9). This amount is up 19 percent from 2015 and is more than double the amount in 2006.