Did you know? Medicare’s Extra Help program (also called the Low-Income Subsidy, or LIS) can save you thousands on prescription drug costs –
with substantial average savings reported by CMS and SSA for qualifying individuals. Yet, many seniors aren’t aware of all the perks this benefit offers. Before diving into the details, let’s start with a few little-known facts about Extra Help:
- Retroactive refunds: If you qualify, Extra Help can pay you back for prescriptions you purchased before your enrollment was effective. In other words, you might get reimbursement checks for past drug costs if your coverage is retroactively granted. (Yes, you could actually receive money back for meds you already paid for!)
- Special enrollment access: Qualifying for Extra Help gives you a Special Enrollment Period (SEP) to join or switch Medicare drug plans outside the usual fall Open Enrollment. In fact, *starting in 2025 you can change your Part D or Medicare Advantage drug coverage once per month if you have Extra Help.
- No late penalties: Extra Help eliminates the Part D late enrollment penalty. If you delayed signing up for drug coverage, the usual premium surcharge doesn’t apply to you at all. This can save you from a lifetime penalty that adds up (the penalty is about 1% of ~$36.78 for every month you delayed in 2025).
Those are huge benefits on top of the obvious cost savings. Now, let’s break down exactly what Extra Help is, how it works, and how it can dramatically reduce your Medicare Part D expenses in 2025.
What is Medicare Extra Help (LIS) and How Does It Work?
How Extra Help Lowers Your Prescription Drug Costs
Extra Help can virtually eliminate most out-of-pocket costs of a Medicare Part D plan. Here’s how it helps in each area of your drug coverage:
- $0 Part D Premiums: With Extra Help, you pay no monthly premium for your Medicare drug plan, as long as you enroll in a basic plan that is within the Medicare-designated “benchmark” premium amount. In 2025, this means many plans will cost you $0 per month. (If you choose a plan that’s above the benchmark, Extra Help will still pay up to the benchmark amount and you’d pay only the difference.)
- $0 Deductible: The standard Part D deductible in 2025 is $590 for most plans – meaning normally you’d pay the first $590 of your drug costs each year out of pocket. Extra Help completely covers the Part D deductible, so you have no annual drug deductible at all. Your coverage starts paying from the first dollar of your medication costs.
- Greatly Reduced Copayments (and No “Donut Hole”): When you fill prescriptions, your copays are capped at very low amounts with Extra Help. In 2025, generics cost at most $4.90 and brand-name drugs cost at most $12.15 each time you fill them – often they’ll be even less. These low copays stay the same throughout the year; you won’t pay more in the coverage gap (“donut hole”) like other Part D users do. In fact, people receiving Extra Help don’t experience a donut hole at all – you continue to pay the minimal copay instead of the usual 25% coinsurance during the gap. This keeps your medication costs predictable and low every month.
- No Catastrophic Payments: Under new rules in 2025, once your total drug costs reach $2,000 for the year, you have $0 copays for all covered drugs for the rest of the year. Extra Help recipients already have such low copays that many won’t hit this $2,000 out-of-pocket cap – but if you do, you won’t pay a penny more after that point. Essentially, Extra Help and the new Part D cap together ensure you’ll never face unlimited drug costs.
In summary, Extra Help can make your Part D plan premium-free, eliminate deductibles, and limit your prescription copays to just a few dollars per medication. These savings apply whether you take a couple of generic drugs or very expensive brand-name medications. To really understand the impact, let’s look at a couple of side-by-side examples of how Extra Help benefits real-world situations.
Real-Life Examples: Extra Help Savings in Action
To illustrate how powerful Extra Help can be, consider the following scenarios:
Example 1: High-Cost Brand-Name Drug – Without vs. With Extra Help
Meet Mary. She’s a 68-year-old Medicare beneficiary who takes an expensive brand-name heart medication that costs $500 per month. She has a Part D plan with a $590 deductible and 25% coinsurance.
- Without Extra Help: Mary must pay the first $590 in drug costs each year due to her deductible. After that, she still pays 25% of her medication cost each month. For a $500 drug, that’s about $125 per month out-of-pocket. In a year, Mary would spend roughly $590 (deductible) + $125×12 = $2,090, just for that one prescription. If she hits the coverage gap (donut hole) before the new cap, her costs would have been 25% in the gap as well – similar in 2025 until she reaches the $2,000 out-of-pocket limit. Essentially, without assistance, Mary is paying over two thousand dollars a year for her medicine, on top of her plan’s monthly premium (around ~$30/month in her area, another $360/year).
- With Extra Help: Mary qualifies for the Low-Income Subsidy, so she pays no premium or deductible. Her costly heart medication now has a fixed copayment of just $12.15 per month. There’s no increase in cost during the year – even if Mary’s drug spending crosses into what used to be the donut hole, her cost remains $12.15. Over a full year, Mary’s out-of-pocket cost for this $500/month drug is only $145.80 (versus $2,000+ without Extra Help). That’s an over 90% savings! Mary can use the money saved to cover other needs, and she doesn’t have to worry about choosing between her medication and other bills.
Example 2: Managing Multiple Chronic Illness Medications with Extra Help
Meet John and Linda. They are a married couple in their 70s. John has diabetes and Linda has heart failure; together, they have several prescriptions: insulin, blood pressure pills, a brand-name cholesterol drug, and more. Their medication list includes a couple of brand-name drugs that cost $300-$400 each per month at full price, plus generics that cost $20-$50 each.
- Without Extra Help: John and Linda’s Part D plan premiums cost about $35 each per month (
$840/year for the couple). They each have a deductible ($590 each), which means the first portions of their yearly drug costs aren’t covered. Once past the deductible, they pay 25% coinsurance on brand-name meds and set copays for generics. For example, John’s insulin (now capped at $35 by law for everyone) and another brand drug costing $300 would mean roughly $75/month coinsurance for that brand drug. Linda’s brand-name cholesterol medication at $400 would cost $100/month coinsurance. On top of that, there are several generics at maybe $10-$15 each per month. Combined, the couple could easily be spending over $200 per month on copays and coinsurance, plus the premiums – amounting to well over $3,000 per year out-of-pocket, even with the new $2,000 cap each (their combined drug spending might hit around $4,000 before caps kick in). Managing these costs is a significant burden on their fixed income, and they might be tempted to skip doses to save money. - With Extra Help: Now assume John and Linda both qualify for Extra Help. Their Part D premiums drop to $0, saving them about $840/year right off the bat. Neither has to worry about a deductible, so their coverage is effective immediately in January. At the pharmacy, every single one of their prescriptions has a small copay. Generic medications might cost them $4.90 or less each. John’s insulin is $35 (due to the insulin law cap), but his other brand drug that was $75/month for him now costs only $12.15. Linda’s brand-name medication also costs $12.15 per fill. Instead of paying over $200 in various drug costs per month, they might now pay on the order of $30-$50 total per month for all their meds. Over the year, their combined drug spending could drop from a few thousand dollars to just a few hundred. Plus, they have peace of mind that even if their drug regimen changes or they need more medications, Extra Help limits their costs in any scenario. John and Linda can focus on managing their health conditions without the constant stress of mounting pharmacy bills.
As these examples show, the Extra Help program can dramatically reduce what you pay – especially if you have high-cost prescriptions or multiple chronic medications. It not only saves money, but also ensures you can afford to stick with your treatment plan, improving your overall health outcomes.
Extra Help and the Part D Late Enrollment Penalty
Another major benefit of Extra Help is that it covers the Part D late enrollment penalty – effectively waiving it entirely. The Part D late enrollment penalty is an extra fee that Medicare adds to your drug plan premium if you didn’t sign up for Part D when first eligible and went without other credible drug coverage. The penalty is calculated as 1% of the national base premium for each month you delayed enrollment. In 2025 the base premium is $36.78, so a delay of, say, 20 months would normally mean a 20% penalty (~$7.36) added to your monthly premium for life. This can really add up and stick you with higher costs every year.
However, if you qualify for Extra Help, Medicare forgives any Part D penalty. You “get out of” the late enrollment penalty, so you won’t pay that extra charge as long as you’re receiving the subsidy. This is a relief for many seniors who perhaps didn’t enroll in a drug plan on time due to cost concerns or not realizing they needed one. Extra Help not only helps pay your ongoing drug costs, it also gives you a fresh start by wiping away the penalty. Even if you delayed Part D for several years, once you have Extra Help, your Part D premium will be just $0 (for benchmark plans) – no penalty included.
Key point: If you’ve avoided getting a Part D plan because you feared the late enrollment penalty, applying for Extra Help can solve that problem. With Extra Help, you can join a drug plan penalty-free, and start getting assistance with your drug costs right away.
Retroactive Benefits: Getting Reimbursed for Past Prescription Costs
One amazing feature of Extra Help (that few people know about) is the possibility of retroactive coverage. This means if you were eligible for Extra Help earlier than the date you actually get enrolled, the program can cover you for those past months – and you can get reimbursed for what you overpaid on prescriptions during that time.
Here’s how it works: Suppose you apply and are approved for Extra Help in June 2025, but based on your application information, Social Security determines you actually qualified as of January 2025. In this case, your Extra Help benefit may be back-dated to January. You can then contact your Part D plan and request reimbursement for the covered drug costs you paid from January through May that year, since you should have been paying the reduced Extra Help amounts during that period. Plans are required to refund you the difference for any premiums or copays you overpaid while eligible for the subsidy. Typically, you’ll need to provide proof of your Extra Help award and receipts for your prescription purchases, and the plan should send you a refund check within a few weeks.
Medicare even has a special arrangement called Limited Income Newly Eligible Transition (LI NET), a temporary drug coverage program administered by CMS that ensures immediate access to medications for individuals who are newly eligible for Medicare and Extra Help but not yet enrolled in a Part D plan. According to CMS.gov, LI NET provides point-of-sale coverage at the pharmacy and can reimburse for prescriptions filled up to 30 days prior to enrollment in certain cases. Seniors can contact the LI NET contractor directly or visit https://www.cms.gov to learn more and check eligibility. that helps people in this situation. LI NET provides temporary Part D coverage for individuals who are newly found eligible for Extra Help but not yet enrolled in a Part D plan. If your Extra Help status is determined retroactively (for example, due to a late Medicaid approval or SSI award), LI NET can cover your prescriptions for up to 2 months in the past, and you “pay and get reimbursed”. In practical terms, this means you can fill prescriptions during that gap and later get your money back once everything is processed. Medicare advises keeping your pharmacy receipts and calling the LI NET help line to claim any refunds due.
Real-world example: Susan applies for Extra Help in August and gets approved, learning that she actually qualified starting in March. She had been paying $50 per month for a blood pressure medication during those months. Once approved, Susan worked with her drug plan to submit a reimbursement request. A few weeks later, she received a check reimbursing her for the difference between what she paid and what she would have paid under Extra Help (which is only $4.90 per prescription). She got back around $225 of previous payments – a welcome relief for her budget. The rules allowed reimbursement for any covered Part D drugs she bought in those months she was eligible but not yet benefiting.
Important: If you think you might have been eligible for Extra Help earlier than your start date, ask about retroactive coverage. Make sure to save your receipts. You can call Medicare or your plan to figure out if a refund is due. Many seniors miss out on this, but it’s essentially money back in your pocket for costs you shouldn’t have had to pay. Extra Help truly “helps” even in hindsight!
Special Enrollment Period (SEP) with Extra Help – Flexibility to Change Plans
Normally, Medicare beneficiaries can only change their Part D or Medicare Advantage plans during designated periods (like the Annual Open Enrollment each fall). However, qualifying for Extra Help gives you a Special Enrollment Period that offers much more flexibility. In fact, as of 2025, if you have Extra Help (or Medicaid), you can **change your Medicare drug plan once per month all year long!
This Special Enrollment Period is a huge benefit because it lets you adjust your coverage at any time to better meet your needs:
- If your prescriptions change or a new drug you need is not well-covered by your current plan, you don’t have to wait months to switch – you can move to a plan that covers your medications more affordably right away (with the new plan taking effect the first of the next month).
- If you find a Part D or Medicare Advantage plan with drug coverage that has lower costs or better pharmacy networks, you have the freedom to make the switch without delay.
- Essentially, you’re not “locked in” to any one drug plan for the year. Extra Help opens a continuous door to choose the plan that’s best for you at any given time.
For example, let’s say you’re enrolled in a certain Part D plan in January, but by March you realize another plan would cover your particular prescriptions with fewer restrictions or lower copays. If you have Extra Help, you can use your one-per-month SEP to switch to that better plan in March and start saving even more, rather than being stuck until the next annual enrollment window.
Many seniors take advantage of this SEP with the assistance of a licensed Medicare broker or agent. An agent who is knowledgeable about Medicare (and even ACA-certified, meaning well-versed in health plan options) can help you compare plans and make sure your drugs are covered at the lowest possible cost. For instance, AffordableCareAgents.com (an ACA-licensed broker) specializes in helping Medicare beneficiaries review their options. They can guide you through changing plans during your Extra Help SEP – whether it’s finding a Part D plan that covers all your medications or switching you from one Medicare Advantage plan to another that better suits your needs. Using a broker costs you nothing; they are compensated by the plans, not by you. The benefit is that you get professional help navigating the choices and paperwork. With a quick review of your medication list and current coverage, a broker can identify if there’s a plan that saves you more money and handle the enrollment change for you. This can be especially helpful if you’re not comfortable with online research or calling multiple insurance companies on your own.
Bottom line: Extra Help not only saves you money, it also gives you freedom to optimize your Medicare coverage. Take advantage of the Special Enrollment Period – and don’t hesitate to get help from resources like a trusted broker or your local State Health Insurance Assistance Program (SHIP) – to ensure you’re in the best plan for your needs at all times. This way, you maximize the value of the Extra Help subsidy and never pay more than you have to for your prescriptions.
2025 Income and Asset Limits for Extra Help (Can You Qualify?)
To benefit from Extra Help, you must meet the program’s financial criteria. These limits change slightly each year. For 2025, the general eligibility thresholds are:
- Income limit: Up to $23,475 in annual income for an individual, or up to $31,725 combined for a married couple living together. (This is roughly 150% of the federal poverty level. Social Security doesn’t count some types of income, so you might qualify with a slightly higher gross income in some cases.)
- Resource (asset) limit: Up to $17,600 in countable resources for an individual, or $35,130 for a married couple. (“Resources” generally include things like savings, investments, and extra property. However, your primary home, one car, personal possessions, and irrevocable burial funds are not counted. In fact, these limits already include a $1,500 per person allowance for burial expenses.)
It’s important to note that these limits are based on your available income and assets, not including everything you own. For example, your house and car are excluded, and if you’re working, a portion of your earnings might be excluded as well. The Social Security Administration has specific rules on what counts. But the figures above are a good rule of thumb – if you are at or below those numbers, you likely qualify for Extra Help.
Example – do I qualify? Let’s say Jane is a single Medicare beneficiary. Her yearly Social Security benefit is $18,000 and she has about $10,000 in a savings account. She owns a home and a car. When determining Jane’s eligibility, Social Security counts her $18,000 income (which is under $23,475) and counts her $10,000 in savings as resources (well under $17,600). Her home and car don’t count. Result: Jane clearly falls below the limits, so she qualifies for Extra Help in 2025.
Now consider Joe and Mary, a married couple on Medicare. Together, their income is about $32,000 a year (from Social Security and a small pension), and they have $40,000 in joint savings and investments. They own a home valued at $150,000 and have one car. For Extra Help, their $32,000 annual income is just above the couple limit of $31,725, and their countable resources of $40,000 also exceed the $35,130 couple limit. Result: Unfortunately, Joe and Mary would not qualify for Extra Help in 2025 based on those numbers. They are a bit over the line in both categories. (They might look into other programs like State Pharmaceutical Assistance or see if certain expenses or life changes could bring them under the limits in the future.)
If your income is slightly higher than the limit, don’t be discouraged – you might still qualify in some cases. Social Security ignores certain types of income (for example, help you receive for household expenses, food assistance like SNAP, or earned income credits, etc., are not counted). Also, if you support other family members in your household, or live in Alaska or Hawaii (which have higher limits), you could qualify with a higher income. It’s worth applying if you’re near the cutoff, because exceptions and deductions exist.
To check if you qualify, you can contact the Social Security Administration or use online tools like the official SSA application portal at https://www.ssa.gov/benefits/medicare/prescriptionhelp. In fact, Medicare.gov’s information confirms these 2025 limits and points out that they typically “go up each year” with inflation.
How to Apply and Get Help with Extra Help
If you think you or a loved one might be eligible for Extra Help, the next step is to apply – it’s free and easier than you might expect. You can apply for Extra Help through the Social Security Administration (SSA), since SSA handles the applications and determinations for this program. Here’s what you can do:
- Apply online: The fastest way is to submit an application on the Social Security website. There’s an “Apply for Extra Help” page that guides you through the process (it’s Form SSA-1020, the Extra Help application). You’ll fill in information about your income, assets, and personal details. If you’re married and living with your spouse, you’ll include information for both of you.
- Apply by phone: You can call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) and ask to apply over the phone or request a paper application be mailed to you. Social Security representatives can walk you through the application and fill it out for you during the call.
- Apply in person: If you prefer face-to-face help, you can visit your local Social Security office and apply in person. It’s a good idea to call ahead for an appointment. You can locate your nearest office on SSA’s website or by calling the number above.
- Get free help locally: If you need assistance with the application or understanding the requirements, you can reach out to your State Health Insurance Assistance Program (SHIP). SHIPs offer free, unbiased counseling on Medicare and related programs. They can help you complete the Extra Help application and answer any questions. Community organizations, such as local aging services or senior centers, may also offer help with applying.
When you apply, be prepared to provide information about your finances – things like income sources (Social Security statements, pension info) and the value of your bank accounts, investments, etc. You do not need to provide information about your home, car, or personal belongings because those are not counted. The application will specify what to include. If you apply online, it will guide you through the needed info step by step.
After you submit your application, SSA will review it and send you a decision letter. If approved, the letter will tell you that you qualify for Extra Help and what to expect next. In many cases, once you’re approved, Medicare will automatically enroll you in a standard Part D plan if you’re not already in one (to ensure you start getting the savings). You’ll also receive information explaining your Special Enrollment Period and how to switch plans if you want to. If you’re denied, but you believe your circumstances meet the criteria, you have the right to appeal or reapply if something changes.
One more tip: If you don’t qualify for Extra Help now, you can reapply any time your finances change. For example, if you spend down some of your savings or your income drops, you might become eligible in the future. There’s no penalty for applying again.
