House Passes Delgado Bill to Lower Out-of-Pocket Prescription Drug Costs for Seniors

Statement

Today the U.S. House passed legislation introduced by Representative Antonio Delgado (NY-19) that would lower out-of-pocket costs for prescription drugs for seniors and individuals with disabilities under Medicare. The Enhancing Retirement Security for Medicare Beneficiaries Act of 2019 was passed as part of H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act. H.R. 3 would generate an estimated $500 billion over the next 10 years by allowing Medicare to negotiate prescription drug costs directly with drug manufacturers and by extending those negotiated rates to the commercial insurance market. Additionally, it would cap annual out-of-pocket drug costs for seniors on Medicare at $2,000 and would reinvest the bill's savings in life-saving medical research. The provision championed by Rep. Delgado would exclude covered retirement accounts from counting as income for the purposes of determining eligibility under the Medicare Part D low-income subsidy (LIS) program.

"As I hold town halls across NY-19 and hear about the issues facing seniors, skyrocketing prescription drug costs are at the top of the list," said Rep. Delgado. "I am proud to vote for legislation to lower the cost of prescription drugs and my Enhancing Retirement Security for Medicare Beneficiaries Act of 2019, which will help low-income seniors remain eligible for subsidies toward prescription drug costs while accessing their hard-earned retirement savings. This is a critical change that will lower out-of-pocket costs for millions of Americans who rely on life-saving prescription drugs. Saving for retirement shouldn't jeopardize low-income subsidies for Medicare Part-D beneficiaries. I urge the Senate to take up this legislation right away to address the soaring cost of prescription medication and allow our seniors to retire with dignity."

The LIS program (also called "Extra Help") covers some or all of the out-of-pocket costs under Medicare Part D for low-income Medicare beneficiaries. The subsidies under LIS reduce or cover Part D premiums, deductibles, and coinsurance, while also eliminating the coverage gap and waiving the penalty for late enrollment. In order to be eligible for LIS, applicants must meet income and asset requirements--married couples must have incomes of $25,365 or less. However, these income limits penalize seniors who have responsibly saved through retirement accounts like 401(k)s or IRAs by counting those disbursements as income for purposes of LIS eligibility.

Rep. Delgado's bill would help incentivize savings and provide more out-of-pocket protection for Medicare beneficiaries by excluding covered retirement accounts for the purposes of determining assets for LIS program eligibility, and would exclude disbursements from those accounts in income calculations for prescription drug plan years beginning 2022. Covered retirement accounts would include: individual retirement accounts, individual retirement annuities, certain qualified trusts, and annuities purchased by not-for-profit organizations or public schools.

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