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Does Social Security Count As Income For Extra Help

What Are The Income And Resource Limits For The Extra Help With Medicare Prescription Drug Costs

Is Social Security Taxable?

En español | To qualify for Extra Help, your total resources must be limited, in 2014, to $13,440 for an individual and $26,860 for a couple, includes $1,500 for burial expenses.

Resources include the value of the things you own. Some examples include:

  • Real estate
  • Bank accounts, including checking, savings and certificates of deposits
  • Bonds, including U.S. Savings Bonds
  • Mutual funds
  • Cash at home or anywhere else

Your home, car and any life insurance policies are not counted as resources.

To qualify for Extra Help, your annual income must be limited to $16,755 for an individual or $22,695 for a married couple living together. Even if your annual income is higher, you may still be able to get some help. Some examples where your income may be higher include if you or your spouse:

  • Support other family members who live with you
  • Have earnings from work

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What Does Not Count As A Resource

The Social Security Administration does not count:

  • Your primary residence.
  • Your vehicle.
  • Resources you couldnt easily convert to cash, such as jewelry or home furnishings.
  • Property you need for self-support, such as rental property or land you use to grow produce for home consumption.
  • Non-business property essential to your self-support.
  • Life insurance policies.
  • Interest earned on money you plan to use for burial expenses.

Certain other money you are holding is not counted for nine months, such as:

  • Retroactive Social Security or Supplemental Security Income payments.
  • Housing assistance.
  • Tax advances and refunds related to earned income tax credits and child tax credits.
  • Compensation you receive as a crime victim.
  • Relocation assistance from a state or local government.

You should contact Social Security for other resource exclusions.

How Will Social Security Contact Me

The SSA will send you a form called Social Security Administration Review of Your Eligibility for Extra Help . Youll have 30 days to complete and return this form. Any necessary adjustments to the Extra Help will be effective in January of the following year. For example, if we send you a review form in August 2020, and you return the review form within 30 days, any necessary adjustment to your Extra Help will be effective in January 2021.

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Can State Agencies Help With Medicare Costs

When you file your application for Extra Help, you also can start your application process for the Medicare Savings Programs. These state programs provide help with other Medicare costs. Social Security will send information to your state unless you tell us not to on the Extra Help application. Your state will contact you to help you apply for a Medicare Savings Program.

These Medicare Savings Programs help people with limited resources and income pay for their Medicare expenses. The Medicare Savings Programs help pay for your Medicare Part B premiums. For some people, the Medicare Savings Programs may also pay for Medicare Part A premiums, if any, and Part A and B deductibles and co-payments.

Medicaid or medical assistance is a joint federal and state program that helps pay medical costs for some people who have limited resources and income. Each state has different rules about eligibility and applying for Medicaid. Contact your state Medicaid office for more information.

How Do I Know If Im Enrolled In Extra Help

Stop Guessing: Here

Youll receive notice of your Extra Help status from the SSA. Notices are different colors depending on your status:

  • Purple notices mean youre automatically qualified.
  • Yellow or green notices mean youre automatically enrolled.
  • Gray notices mean youre no longer automatically qualified.
  • Orange notices mean the amount of Extra Help youre getting is changing.

Its important to keep an eye on your mail and keep track of the notices you get from Social Security. Reading all communication ensures you wont be surprised by any costs and will have time to prepare for any changes.

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How To Apply For Medicare Extra Help

You automatically qualify for Extra Help and do not need to apply if you receive full Medicaid benefits, youre enrolled in a Medicare Savings Program, or you receive Supplemental Security Income benefits.

In all other scenarios, you can apply online for Medicare Extra Help through the Social Security Administration site. You can also apply in person at your local Social Security office or call 1-800-722-1213 to apply over the phone. You can also call to request a physical application by mail.

Once you apply, the SSA will review your application and send a letter saying whether or not you were approved. If you do qualify for Extra Help, you need to enroll in a Medicare Part D prescription drug plan. You can do so right away because approval for Extra Help qualifies you for a Medicare special enrollment period. Compare plans in your state on the Medicare website, which will help you apply for one directly through the insurer.

What Is The Income Limit

To qualify for Extra Help, your annual income must be limited to $19,140 for an individual or $25,860 for a married couple living together. Even if your annual income is higher, you may still be able to get some help.

Some examples where your income may be higher and you can still get Extra Help include if you or your spouse:

  • Support other family members who live with you.
  • Have earnings from work.
  • Live in Alaska or Hawaii.

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How Do I Choose A Specific Plan

Visit Medicare.gov, and use the following tools to help you decide.

  • Compare Medicare prescription drug plans You can find and compare the prescription drug plans in your state that meet your personal needs and enroll in the prescription drug plan you select.
  • Formulary Finder You can enter information about the specific medications you take and get information to help you find the plans in your state that match your prescription drug needs.

To learn more about Medicare prescription drug plans and special enrollment periods, please visit Medicare.gov or call 1-800-MEDICARE.

What Kind Of Income Counts As Earnings

How much your Social Security benefits will be if you make $30,000, $35,000 or $40,000

The Social Security income limit applies only to gross wages and net earnings from self-employment. All other income is exempt, including pensions, interest, annuities, IRA distributions and capital gains.

The term wages refers to your gross wages. This is the money that you earn before any deductions, including taxes, retirement contributions, or other deductions.

If you want to see a more in-depth conversation about what counts as income for the earnings limit, see my article on the Social Security Income Limit: What Counts as Income?

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Ial Extra Help Program

Partial Extra Help supports people who are on Medicare. If you have less than $19,320 inannual income as an individual or $26,130 as a couple , you may be eligible.

Please note: Most PAN grantees may only be eligible for Partial Help. People eligible for full coverage are almost always automatically enrolled.

  • No monthly premium or premium based on a sliding scale
  • $92 annual deductible
  • Co-pay for the plans formulary drugs is 15% or the plans co-pay, whichever is less
  • Catastrophic co-pay is no more than 5% of the drug cost.

Extra Help cost savings comparison

*2021 numbers** Assumes drug falls into the 15% co-pay category

Medicare Extra Help Income Limits

  • Extra Help can help you pay for Medicare Part D if you have limited income and resources.
  • Part D is the part of Medicare that covers prescription drugs.
  • As an individual, you must make less than $19,320 and have less than $14,790 in resources to qualify.
  • If youre married, you and your spouse will need to make less than $26,130 in total income and have less than $29,520 in combined resources.

If you need help paying for the costs of your Medicare Part D prescription drug plan, you might qualify for assistance through a program called Extra Help. To qualify for Extra Help, you need to meet certain financial requirements.

Read on to learn about Medicares Extra Help program, including this years income limits, how to qualify, enrollment information, and more.

When you have a Medicare Part D plan, youre responsible for monthly premiums, deductibles, copayments, and coinsurance amounts.

Medicare Extra Help can help you pay some or all of those costs.

The program is overseen by the Social Security Administration and is based on income. The SSA estimates that program participants can save as much as $5,000 per year.

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Does Medicare Premiums Reduce Social Security Taxable Income

Asked by: Antwan Feeney

Is Social Security Taxed Before Or After the Medicare Deduction? You may not pay federal income taxes on Social Security benefits if you have low-income. But for most, your Social Security benefits are taxable. That means you’ll pay taxes before Medicare premiums are deducted.

How Can I Reduce My Medicare Premiums

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How Can I Reduce My Medicare Premiums?

  • File a Medicare IRMAA Appeal. …
  • Pay Medicare Premiums with your HSA. …
  • Get Help Paying Medicare Premiums. …
  • Low Income Subsidy. …
  • Medicare Advantage with Part B Premium Reduction. …
  • Deduct your Medicare Premiums from your Taxes. …
  • Grow Part-time Income to Pay Your Medicare Premiums.
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    Why We Have An Earnings Limit

    Not long ago, a viewer on my YouTube channel asked me to give her a good reason why we have the Social Security earnings limit. The comments that followed showed how many viewers shared the belief that the earnings limit is unfair and should be eliminated.

    In my response, I explained that the rationale behind the entire program of Social Security was to create a safety net. The original intent of the Social security program was not to supplement retirement income, but to keep the elderly out of poverty.

    I also added that todays earnings limit is relatively generous compared to where the Social Security earnings limit began. The original Economic Security Bill President Roosevelt sent to Congress featured a very restrictive earnings limit.

    That bill stated, No person shall receive such old-age annuity unless . . . He is not employed by another in a gainful occupation.

    Whoa! This means that if you had even a single dollar in wages from a job, you could not collect a Social Security benefit at all.

    Thankfully, the system we have in place today allows for individuals to have some earnings from work while they are receiving a Social Security benefit.

    However, its very important to stay informed on the dollar amount of this limit because it changes every year.

    For 2022, the Social Security earnings limit is $19,560. For every $2 you exceed that limit, $1 will be withheld in benefits.

    2022 Social Security Earnings Limit

    What Is The Income Limit For Medicare Extra Help

    Extra Help is a financial support program for those with Medicare. It helps people with limited resources manage the cost of prescribed drugs. An income limit is set which determines eligibility.

    Extra Help is also known as a low income subsidy . This means that the amount of help a person receives from the government may vary as it depends on income and financial need.

    Medicare Extra Help could save an individual a substantial amount of money each year by helping them to pay for premiums, deductibles, and copayments.

    Even though the Extra Help program is beneficial, many individuals who qualify have not yet enrolled.

    This article looks at the Medicare Extra Help program, the income limits, benefits, and how a person can apply to the LIS program to help with the cost of their prescriptions.

    Original Medicare covers the costs of medication during a stay in the hospital, but there is limited coverage for take-home prescription drugs.

    Medicare Part D is a plan that covers prescription drugs. The plan is also known as a prescription drug plan .

    When a person has a PDP, they must usually pay monthly premiums, copayments, and deductibles.

    Private insurance companies administer PDPs, and because of this, different benefits and coverage options may apply. Costs will also vary.

    Each plan has a formulary that specifies which drugs the plan covers.

    An individual should ensure that the plan they wish to enroll in covers the prescription drugs they need.

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    What If My Income Changes And I No Longer Qualify For Medicare Extra Help

    Your eligibility for Medicare Extra Help lasts for an entire year. But Social Security will review your eligibility periodically.

    To do this, the SSA will contact you with a form. These forms typically get sent out in the fall. If you dont receive one, you can count on your Extra Help staying the same in the coming year.

    If you do get a form, youll need to fill it out within 30 days and send it back. If you dont, your coverage will end in January of the upcoming year. For example, if you receive an eligibility review form from Social Security on September 14, 2021, and dont send it back by October 14, your Extra Help will end in January 2022.

    When you return the form, a few things might happen. Depending on changes to your income, your Extra Help could:

    • stay the same

    The SSA will notify you of this decision. If you no longer qualify or qualify with higher out-of-pocket costs, youll get a letter explaining the changes. You might need to start paying premiums to keep your Part D plan.

    Even if you no longer qualify for Extra Help, you might still be able to get help paying your Part D costs. You can contact your states Medicaid office or State Health Insurance Assistance Program for information on programs that can help you pay for your prescriptions.

    What Does Medicare Extra Help Cover

    Social Security Administration announces cost of living increase

    Individuals who qualify for the full Extra Help subsidy wont have to pay any premiums or deductibles. They also will only pay $8.95 for each prescription drug that their plan covers. Individuals who only receive partial subsidies may still have premiums and deductibles but they will be substantially less than what they are under Original Medicare.

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    What To Do Ifyou Get An Overpayment Notice From The Social Security Administration

    Ifyou are under full retirement age and receive income from a source that is notone of the common ones we discussed above, youll likely receive a letter fromthe SSA alleging an overpayment.


    Youdo need to communicate with theSocial Security Administration about this notice, or theyll turn you benefitoff but just because you receive a letter saying that the earnings testshouldve applied doesnt mean they are right.

    Iveseen multiple cases in which all a client had to do was write a letter ofexplanation because the mistake was on the SSAs end.

    Justbe aware that when it comes to the earnings test, the Social SecurityAdministration seems to use the same playbook as the IRS does when they have aquestion. Instead of sending you a letter to get clarification, they simplyassume they are right and tell send you a letter saying how much you owe inadditional taxes.

    Forexample, if a client sells a stock and doesnt include the cost basis, the IRSjust assumes the entire amount of the proceeds should be a capital gain. Youhave to go back to them and tell them how much of the proceeds were the costbasis and how much represented an actual gain.

    TheSocial Security Administration will often do something similar when it comes tothe earnings test and payments or income you received. Theyll send you anoverpayment letter that says something along the lines of,

    What Is Not Counted Toward Income Limit

    Medicare does not count certain kinds of payment or assistance towards the income limit for Medicare Extra Help.

    Typically, payments from the federal or local governments do not count. For example:

    • Supplemental Nutrition Assistance Program or food stamps
    • housing assistance
    • earned income tax credit payments
    • disaster assistance
    • victim compensation payments
    • scholarships and education grants

    Medicare also does not count any money that someone else provides to help towards an individuals household expenses.

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    Understanding The Extra Help With Your Medicare Prescription Drug Plan

    Anyone who has Medicare can get Medicare prescription drug coverage. Some people with limited resources and income also may be able to get Extra Help with the costs monthly premiums, annual deductibles, and prescription co-payments related to a Medicare prescription drug plan.

    The Extra Help is estimated to be worth about $5,000 per year. Many people qualify for these big savings and dont even know it. To find out if you qualify, Social Security will need to know the value of your savings, investments, real estate , and your income. The SSA needs information about you and your spouse, if you are married and living together.

    To help Social Security determine if you are eligible for Extra Help, you will need to file an Application for Extra Help with Medicare Prescription Drug Plan Costs .

    Do I Qualify For Medicare Extra Help

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    You automatically qualify for Extra Help if you receive Medicaid coverage, are enrolled in a state-sponsored Medicare Savings Program, or get Supplemental Social Security benefits. You may also be eligible if your:

  • Income is no more than $19,320 per year . Payments that do not count toward your total income include food stamps, housing assistance, disaster assistance, scholarships, and/or education grants.
  • Resources total no more than $14,790 . Resources that count toward your total include savings and checking accounts, stocks, and/or bonds. Items such as your house, car, and/or furniture do not.
  • The cutoff amounts differ if you are caring for dependents or if you live in Alaska or Hawaii.

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