Personal Finance

Medicare beneficiaries might get $200 to help with drug costs. Here's what we know so far

Key Points
  • President Donald Trump said during a speech on Thursday that his administration will send $200 cards to offset drug costs to 33 million Medicare beneficiaries.
  • One expert said that's how many enrollees get no extra help from the Medicare program to pay their prescription drug costs — i.e., middle-income and higher-income recipients.
  • Roughly 62.7 million individuals — the majority of whom are age 65 or older — are on Medicare.
  • About 45 million have Medicare Part D prescription drug coverage either through a standalone plan or as part of an Advantage Plan.
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Amanda Perobelli | Reuters

You may have heard that Medicare beneficiaries will soon get $200 to help pay for prescription drugs.

You may want to temper your expectations.

While President Donald Trump said during a speech on Thursday that his administration will send that amount via some sort of payment card to 33 million Medicare beneficiaries — which would cost about $6.6 billion — he didn't say who that figure includes. Roughly 62.7 million individuals — the majority of whom are age 65 or older — are on Medicare, although coverage varies among them.

However, "that's the number of those enrolled [with prescription drug coverage] who don't get low-income subsidies," said Juliette Cubanski, deputy director for the Kaiser Family Foundation's program on Medicare policy.

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Prescription drug benefits are generally delivered through Medicare Part D. While some beneficiaries pair a standalone Part D plan with original Medicare (Part A hospital coverage and Part B outpatient care), others receive their drug coverage through a Medicare Advantage Plan. Between the two, roughly 45 million Medicare beneficiaries have Part D coverage, according to 2019 research from the Kaiser Family Foundation.

Of those, about 12 million have low-enough income to get assistance from the Medicare program to help pay for their prescription drugs. The remaining, about 33 million, get no extra help, Cubanski said.

Beneficiaries with higher incomes also pay more for their Part D premiums (see chart).

The White House says the cards would be paid for under a Medicare program that's generally intended to test innovations to improve health care or lower prices — and must be "budget neutral." To offset the cost of the cards, savings derived from Trump's drug-pricing plan would be applied, a White House official told CNBC. However, that program — which relies on drug manufacturers charging the same price in the U.S. that it does in comparable countries — only exists as a proposal and has not been implemented or enforced.

Trump's announcement was made as part of a campaign speech delivered in Charlotte, North Carolina, on Thursday, where he signed an executive order aimed at protecting people with preexisting conditions (which already is law, under the Affordable Care Act), preventing surprise medical bills and lowering health care costs. (The order makes no specific mention of the $200 cards.)

"Nobody's seen this before," Trump said. "These cards are incredible.

"The cards will be mailed out in coming weeks," he added. "I will always take care of our wonderful senior citizens."

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The cards will be for prescription drug copays, the White House spokesperson said.

Some Medicare beneficiaries with high drug costs reach what's called the "donut hole," when there's a temporary limit on what the enrollee's plan will cover and their per-prescription cost might rise. In 2020, that gap starts once you and your plan have spent $4,020 on covered drugs. Beneficiaries who get extra help from Medicare to pay for their prescription drugs don't experience the donut hole.

More details about the $200 cards will be forthcoming, an administration official told reporters on a call Friday morning.