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Letter to Senator Gordon Smith regarding the Medicare Part D asset test

June 06, 2008

Dear Senator Smith:

On behalf of the National Education Association's (NEA) 3.2 million members, we would like to express our support for your efforts to repeal or modify the subsidy asset test under the Medicare Part D prescription drug benefit. Such a change would allow more low income Medicare beneficiaries with limited assets to qualify for financial assistance with Part D premiums and other out-of-pocket drug costs.

Currently, millions of low income Medicare beneficiaries do not qualify for the subsidy because they fail the asset test. A recent GAO report (Medicare Part D Low Income Subsidy, May 2008, GAO-08-812T) found that many beneficiaries denied eligibility had assets that exceeded the limit, some by as little as $4,572. Most who do not meet the asset test, in reality, have very modest assets, which tend to be bank accounts rather than stocks, mutual funds, and bonds.

In addition, beneficiaries are required to complete complex documentation of the value of their assets, including bank accounts, vehicles, and property other than their home. Often, beneficiaries are denied for failing to complete the application rather than for being over the asset limit.

Widows tend to fail the asset test at a far greater rate than married couples or males. They tend to be older, live alone, and have more chronic illnesses necessitating prescription drug purchases, but have less family support.

Because of these problems, many low income individuals face the same Part D "doughnut hole" cost-sharing requirements as wealthier beneficiaries. Besides paying full monthly Part D premiums, these beneficiaries are responsible for substantial out-of- pocket costs.

Repealing or modifying the asset test would help protect low income individuals who would otherwise be excluded from subsidized prescription drug benefits due to the asset test.

We thank you for your leadership on this important issue.


Diane Shust, Director of Government Relations

Randall Moody, Manager of Federal Advocacy