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A look at Medicare's new prescription-drug plan

In January, low-income older Americans will get a new prescription-drug plan under Medicare that will pay most of the cost of their medicine.

Here are the details:

On Friday, the Social Security Administration started mailing 20 million applications for the Medicare prescription-drug benefit's low-income coverage. The letters will go to elderly recipients of Medicare and younger recipients with disabilities. In addition, Medicare will send out nearly 10 million notices to other beneficiaries who already qualify for the low-income subsidy and need not apply for it.

WHO'S ELIGIBLE?

If your individual annual income is below $14,355 and your personal assets don't exceed $11,500, you may qualify. Married couples who live together may qualify if their income is $19,245 or less and their assets don't exceed $23,000. These amounts may be higher for people who pay at least half the cost of supporting other relatives in the household, live in Alaska or Hawaii, or are employed. The working blind and disabled have additional income exclusions.

WHAT ASSETS COUNT TOWARD ELIGIBILITY?

Belongings considered personal assets include: real estate other than one's primary residence; bank accounts such as checking, savings and certificates of deposit; stocks; bonds, including U.S. Savings bonds; IRAs and mutual funds; cash at home and elsewhere.

WHAT ASSETS DON'T COUNT TOWARD INCOME?

Your primary residence; your vehicle(s); household goods and personal possessions; resources not easily converted to cash, such as farm machinery, jewelry and livestock; and federal income tax refunds.

WHO GETS WHAT?

Depending on your income, you could receive coverage that includes: a $50 deductible or none at all; a sliding-scale monthly premium that averages $18 per month or none at all; co-pays of $2 for generic drugs and $5 for other drugs.

HOW DO I APPLY?

Wait for an application letter from the Social Security Administration. The letters will be mailed over a 12-week period that began Friday. If you don't receive a letter, contact your local Social Security office or your local Medicaid office for an application. Beginning July 1, you also can apply online at www.socialsecurity.gov.

NEED HELP APPLYING?

Contact your local Social Security office, or call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) For a sample application and a worksheet to help fill out the application, go to www.ssa.gov/prescriptionhelp.

Your area State Health Insurance Assistance Program can also help you fill out the application. For an online list of state assistance programs and their phone numbers, go to www.healthassistancepartnership.org/site/PageServer?pagename=SHIPS.

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(c) 2005, Knight Ridder/Tribune Information Services.

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