Does Medicare drug card reduce other benefits?

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Against the express wishes of the U.S. Congress in writing last year’s sweeping new Medicare law, it appears that low-income beneficiaries who sign up for a $600 subsidy to help pay for their medicines could face a reduction in food stamps they get to help pay for their groceries.

The issue first arose at a Senate hearing Tuesday, when Senate Minority Leader Tom Daschle told Medicare Administrator Mark McClellan that he had heard from a constituent who was told that she would be losing some of her food stamps because she had signed up for a new Medicare “drug discount card” that offered the $600 benefit.

"To have to choose between food and drugs, that’s just not fair,” Daschle said.

But McClellan insisted that South Dakota food stamp officials were misinterpreting the law. “The Medicare Modernization Act states that these new benefits, especially low-income benefits, cannot take away any existing benefits that our low-income seniors already enjoy,” he said.

That is not how the U.S. Department of Agriculture sees it, however.

In a March 10 memo to Food Stamp directors, the USDA did make it clear that the $600 should not be counted as income when determining eligibility for the food stamp program. But at the same time, said the memo, “state agencies should be reminded...that households may not claim a medical deduction for the cost of any prescriptions they receive free through use of the card since such costs would not be out-of-pocket.”

South Dakota Food Stamp Director Judy Toelle said that means that if a Medicare beneficiary goes from spending $300 per month on drugs to spending just $30 because of the new subsidy, their income will go up, and the amount of food stamps down.

“We can only allow for expenses they are paying,” she said.

In virtually every case a beneficiary would still gain more from the Medicare subsidy than he or she would lose in food stamp benefits; however, the beneficiary would not get the total $600 this year and next that Congress intended.

Elaine Ryan of the American Public Human Services Association, which represents the nation’s food stamp directors, agreed with Toelle’s interpretation. “That’s exactly right, their benefits would be reduced because of the discount card,” she said.

But Bill Pierce, a spokesman for the Department of Health and Human Services, says USDA is wrong. “The law is clear in terms of (the $600) having no impact on other federal benefits and we are working with USDA to resolve this,” he said.

Pierce added that seniors who may be eligible for the low-income aid (generally individuals with incomes under about $12,600 a year and couples with incomes below about $16,000) should not let fear of losing food stamps deter them from signing up for the drug cards.

“This will be taken care of,” he said.

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