What is the low-income subsidy program and how is it changing?

The low-income subsidy program (LIS) is a program within Medicare Part D that provides “extra help” to vulnerable patients below a certain income level and with limited resources for their Part D out-of-pocket costs. The program reduces cost sharing for medicines and pays premiums and deductibles for qualifying Part D patients.

The LIS program has been crucial to helping low-income Americans age 65 or older, as well as younger Americans with certain medical needs, access their medicines. However, the Inflation Reduction Act (IRA) made a number of changes to the program — some good and some bad — that are putting that improved access at risk.

What changes did the IRA make?

One of the positive changes in the IRA was the expansion of the LIS program. All Part D patients with incomes up to 150% of the federal poverty level who are under the resource limits now qualify for an LIS “benchmark plan” with no premiums, no deductibles and fixed copays. One estimate found this change alone could help 400,000 Part D enrollees.

Unfortunately, the IRA also enabled CMS to select medicines for government price setting, which alters the dynamics of Part D marketplace and has resulted in unintended consequences for LIS plans available for patients and the coverage they offer.

In 2024, there are fewer LIS benchmark plans offering $0 premiums available for Part D patients to enroll in if they qualify. The total number of LIS benchmark plans available decreased by 34%, dropping from 191 plans in 2023 to 126 plans in 2024. The loss of these plans falls disproportionately on racial and ethnic minorities, who represent 48% of Part D LIS enrollees. In fact, in seven states, (FL, IL, MO, NV, NJ, OH, TX) there is only one LIS benchmark plan available to low-income enrollees, which limits the options to pick a $0-premium plan that provides them with coverage of the medicines they need.

As a result of fewer LIS benchmark plans offering $0 premiums, more and more low-income seniors and people with disabilities are being forced to choose plans where they need to pay premiums to access their medicines. A new analysis found that one million more LIS enrollees are paying Part D premiums in 2024, as compared to 2023. Of these enrollees, those in stand-alone prescription drug plans have an average premium of $34 a month, and some must pay an even higher amount. Almost 150,000 LIS enrollees’ monthly prescription drug plan premiums range from $50 to $75 or more.

What was the point of expanding eligibility for the LIS program if those enrollees can’t access plans offering the financial benefits of the program?

CMS must prioritize giving patients options that fit their needs — both financially and in terms of access to medicines. And Congress must examine the unintended consequences of the IRA on the Part D market. Stabilization of plan options, especially LIS benchmark plans, will ensure LIS enrollees have access to vital medications.