How the End of the Medicare Part D Subsidy Could Affect Nursing Home Residents

For many seniors living in nursing homes, prescription drugs are not optional — they are essential to daily survival. Blood thinners, insulin, antipsychotics, heart medications, and pain management drugs can easily add up to thousands of dollars a year.

For decades, a federal program called the Medicare Part D Low-Income Subsidy (LIS) — often called Extra Help — has shielded the most vulnerable seniors from those costs. But proposed and enacted changes to how this subsidy works are raising serious concerns for families, care advocates, and nursing home administrators across North Carolina.

Here is what is changing, who is most at risk, and what families can do right now.

Medicare Part D covers prescription drugs for Medicare beneficiaries. But Part D plans charge premiums, deductibles, and copays — costs that can be unmanageable for seniors on fixed incomes.

The Low-Income Subsidy (LIS), also called Extra Help, was created to cover or reduce those costs for people who qualify based on income and assets. There are two tiers:

• Full Extra Help (Level 1): Covers the full Part D premium up to a benchmark amount, eliminates the deductible, and caps copays at a few dollars per prescription.
• Partial Extra Help (Level 2): Covers a portion of the premium and reduces — but does not eliminate — other cost-sharing.

For nursing home residents, full Extra Help has historically meant $0 in out-of-pocket drug costs in most cases. That is a lifeline for people whose entire monthly income may be $30 or less after Medicaid takes their Social Security for care costs.

Under the Inflation Reduction Act and subsequent regulatory changes, the way Medicare calculates the benchmark premium for Extra Help has shifted. The benchmark is the cap up to which the subsidy will pay a plan's premium.

Here is the problem: as Part D plan premiums rise, the benchmark has not always kept pace. When a senior's plan premium exceeds the benchmark, they face a premium gap — a monthly charge they must pay out of pocket.

For a nursing home resident receiving Medicaid, that gap can be devastating. After Medicaid takes most of their income for the cost of care, many residents are left with a personal needs allowance of just $30–$70 per month in North Carolina. A $10 or $20 monthly premium gap can consume a significant portion of that allowance — money that was meant for toiletries, clothing, and phone calls to family.

Additionally, some seniors who previously qualified for full Extra Help are being reclassified to partial Extra Help as income and asset thresholds are updated, exposing them to higher cost-sharing they were never previously responsible for.

The seniors most vulnerable to these changes are those who are:

• Dually eligible — enrolled in both Medicare and Medicaid (often called "dual eligibles")
• Living in a skilled nursing facility on Medicaid
• Enrolled in a Part D plan whose premium exceeds the benchmark
• Recently transitioned from community living to a nursing home and not yet re-enrolled in the most cost-effective plan

North Carolina has approximately 70,000 nursing home residents, and a large share are dually eligible. For these individuals, even small increases in drug costs can create real hardship or force difficult choices about which medications to take.

If your loved one lives in a nursing home and relies on Medicare Part D, take these steps:

Ask the nursing home's business office or social worker. Many residents are auto-enrolled in plans without family awareness.

The Medicare Extra Help benchmark changes annually. If your loved one's plan premium is above the benchmark, they may owe a monthly premium. Call 1-800-MEDICARE or visit medicare.gov to check.

Dual-eligible beneficiaries can switch Part D plans once per quarter — not just during the annual October–December open enrollment window. If a lower-premium plan is available that still covers your loved one's medications, switching could eliminate the premium gap entirely.

If your loved one has not applied for Extra Help recently — or if their financial situation has changed — reapply through the Social Security Administration at ssa.gov/extrahelp or by calling 1-800-772-1213. Eligibility thresholds are updated annually.

North Carolina's Seniors' Health Insurance Information Program (SHIIP) offers free, unbiased Medicare counseling. Trained counselors can review your loved one's current plan, compare alternatives, and help with Extra Help applications at no cost.

Call NC SHIIP at 1-855-408-1212 or visit ncshiip.com.

Changes to Part D subsidies do not happen in a vacuum. When nursing home residents face higher drug costs, the consequences can ripple outward:

• Medication non-adherence — residents or families may ask facilities to reduce or discontinue medications to cut costs
• Increased hospitalizations — skipping critical medications leads to preventable health crises
• Financial stress on families — adult children who are already stretched thin may feel pressure to cover the gap themselves
• Administrative burden on facilities — nursing homes must navigate billing, appeals, and plan changes on behalf of residents who cannot do so themselves

Advocacy organizations including AARP, the National Consumer Voice for Quality Long-Term Care, and the Medicare Rights Center have all raised concerns about the impact of subsidy changes on the most vulnerable Medicare beneficiaries.

Navigating Medicare, Medicaid, and long-term care financing is genuinely complex — and it changes every year. If your family is trying to understand how these changes affect your loved one's care costs, or if you are planning ahead for a potential nursing home placement, Guardian Care Consultants can help you make sense of the options.

We work with families throughout North Carolina to:

• Evaluate current care arrangements and costs
• Identify benefits your loved one may not be receiving
• Connect you with the right local resources, including SHIIP counselors and Medicaid specialists
• Advocate for your loved one's needs within the care system

Call us at 984-318-4988 or book a free consultation to speak with a care consultant today.

This post is for informational purposes only and does not constitute legal, financial, or medical advice. Medicare rules and subsidy thresholds change annually. Consult a licensed Medicare counselor or benefits specialist for guidance specific to your situation.