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Issue Alert - 04-12-01

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Dec 06, 2004

Issue Summary:

FIA issued a policy on how they will handle medical deductions for seniors receiving the Medicare prescription discount card.

Persons Affected:

FAP recipients who are seniors and using the Medicare prescription discount drug card

For More Information:

Michigan Poverty Law Program 611 Church Street, Suite 4A Ann Arbor, MI 48104-3000(734) 998-6100(734) 998-9125 Fax


Food stamps or Food Assistance Program (FAP)

What's Happening?

FIA has issued their policy to caseworkers on how to determine the amount of medical deductions for senior/disabled persons who receive the Medicare Prescription drug card in accordance with the Medicare Act. There are two types of prescription discounts that must be taken into account when determining FAP eligibility – 1) an annual credit for senior/disabled person with income under 135% of poverty and 2) the amount of the discount recipients receive because of the card. 1) The $600 creditFor senior/disabled individuals who receive the $600 yearly credit to purchase prescriptions (those at or under 135% of the federal poverty level), the caseworkers are to budget a medical deduction each month in the FAP formula to cover the credit.2) The standard allowance for the prescription discountThe estimated value of the drug prescription card discounts is $276 per year. So caseworkers will budget medical deduction per month for seniors who receive the discount from the Medicare prescription card.ExampleUsing the same example as above, Betty and Al’s $600 yearly credit will now be counted as a medical deduction instead of income. Thus, each would get a $50 a month medical monthly deduction from their income. Also, Betty and Al would each be eligible for a $23 monthly medical deduction in addition to their $75 out-of-pocket prescriptions cost and their other out-of-pocket expenses. Thus, their monthly FAP eligibility would be $138 a month.Now, assume Al gets a job that pays him $400 a month which brings their total income to $1,500 a month. This income would make them ineligible for the $600 credit; however, they would still receive the discounted prescriptions. So they would not get the $50 monthly medical deduction for the $600 credit, but they would receive the $23 medical deduction for the reduced costs of the prescriptions. Their FAP eligibility would be approximately $10 a month. Actual prescription costs exceed discounted benefitsIn some circumstances, if the customer has high prescription costs, FIA should use the out-of-pocket medical expenses for the deduction amount rather than the standard discounted amount. If advocates or clients have questions about which formula should be used, they should contact the food stamp helpline at (800) 481-4989.

What Should Advocates Do?

Advocates who have senior or disabled clients who receive the Medicare discount drug card should have their clients call CCJ's statewide Food and Nutrition Helpline at (800) 481-4989 to make sure that their Food Assistance has been properly calculated.

What Should Clients Do?

Seniors or disabled individuals who receive food stamps and the Medicare discount drug card benefit should call the Food and Nutrition helpline at (800) 481-4989 to verify that they are receiving the correct amount.Senior/disabled individuals whose Food Assistance is reduced as a result of decrease in prescription expenses, should call the Food and Nutrition Helpline to make sure that the discounts were properly budgeted.

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee. You can locate the "free" legal services or legal aid office that serves your county on the Michigan LawHelp web site ( or look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.