January 29, 2004

Medicare Discount Drug Card Offers An
Opportunity To Expand

Food Stamp Enrollment Among The Elderly And People With Disabilities

By Dorothy Rosenbaum

PDF of analysis

View Related Reports

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

Nearly one in three non-institutionalized people enrolled in Medicare, or about 10 million people who are elderly or disabled Medicare beneficiaries, have incomes below 150 percent of the federal poverty level, $13,470 a year for a single person and $18,180 for a couple in 2004.[1]  Many of these individuals face significant challenges in affording the rapidly growing cost of prescription drugs while at the same time attempting to meet all of their other basic needs on their low, often fixed, incomes.

Late last year Congress and the President expanded Medicare to help assist the elderly and people with disabilities pay for some drug costs.  The new drug benefit, known as Medicare Part D, will go into effect in January 2006.  In the interim, a temporary Medicare Discount Drug Card program is scheduled to be available beginning in June 2004.  As part of this program a $600 per year subsidy in federally-funded “Transitional Assistance” will be available to low-income Medicare beneficiaries to help them cover their prescription drug costs.

Many of the low-income Medicare beneficiaries who are eligible for the Transitional Assistance are also eligible for assistance in purchasing food through the Food Stamp Program.  The typical low-income individual who is elderly or has a disability and has Social Security income and out-of-pocket medical expenses qualifies for about $50 a month, or $600 a year, in food stamps.  Those with exceptionally high medical or housing expenses can qualify for more.

The Food Stamp Program has relatively high participation rates for very low-income individuals who are elderly or disabled and already connected to other benefits, such as Supplemental Security Income (SSI) and Medicaid.  According to the Department of Agriculture (USDA), which administers the Food Stamp Program, approximately 80 percent of such individuals who are eligible for food stamps participate in the program.  However, the program does a much poorer job reaching out to eligible individuals who do not receive these other programs’ benefits.  Overall, the program serves only about 30 percent of eligible elderly people and half of the population of eligible adults with disabilities.[2]  USDA estimates that there are almost 6 million seniors and adults with disabilities who are eligible for food stamps but do not receive them.

The next several years offer a unique opportunity to connect eligible individuals who are elderly or disabled to the Food Stamp Program.  Many of the people who are eligible for but do not participate in the Food Stamp Program will be applying for Transitional Assistance through the Medicare Discount Drug program.  The agency that administers Medicare expects that 4.7 million Medicare beneficiaries will receive Transitional Assistance.  The federal government, states, drug companies, pharmacies, and advocacy groups that are already planning to reach out to this population for the purpose of connecting them to Medicare drug assistance should consider ways to add food stamp benefits to their outreach packages in order to increase the total utilization of government assistance that is available to help low-income seniors and people with disabilities make ends meet.

This paper briefly summarizes the new Medicare Drug Discount Card and Transitional Assistance Programs.  It then describes the food stamp benefit that is also available to the same population as well as other benefits that could be included in any outreach efforts.  Finally, it suggests some possible opportunities to assist low-income seniors and people with disabilities.  Additional opportunities will be available in 2006, when the permanent Medicare Part D structure goes into effect.


 The Medicare Discount Drug Card and Transitional Assistance

The Medicare drug law will be implemented in two phases.  The “Medicare Part D” permanent benefit structure will go into effect in January 2006.  In the interim, a Medicare Discount Drug Card with Transitional Assistance subsidies for low-income Medicare beneficiaries is scheduled to be available beginning in June 2004.

Medicare Discount Drug Card

Transitional Assistance

CMS estimates that there are 15.4 million Medicare beneficiaries who are eligible for, (and would benefit from) either the discount card only or the discount card in combination with Transitional Assistance.  They expect 7.4 million people will enroll in the discount drug card, of whom 4.7 million will be eligible to receive Transitional Assistance.[3]


 The Food Stamp Program

The Food Stamp Program provides federally-funded food assistance to eligible low-income families and individuals.  In federal fiscal year 2003 it provided a total of $21.4 billion to a monthly average of 21.3 million individuals, of whom about 4 million were elderly or disabled adults.  The program is administered by state agencies, whose costs are shared with the federal government.

Eligibility and Benefit Levels

Eligibility for food stamps and the amount of benefits are determined for each household that applies based on its size, income, and deductible expenses.  A household consists of individuals who live together and who purchase and prepare meals together.  For a household with an elderly or disabled member to be eligible it must meet an income test and an asset test.  The household’s net income, after all available deductions are taken into account, must be below the federal poverty level (in fiscal year 2004 $749 a month for a household of one and $1,010 a month for a household of two) and its assets, not including a primary residence, personal items, and an automobile in most states, must be below $3,000.

Deductions play a very important role in food stamp eligibility and benefit levels by taking into account certain household expenses in determining the amount of income that is available to purchase food.  Not all of a household’s income is assumed to be available to purchase food because some must be used to meet its other needs.  In determining monthly net income the following deductions are allowed:

For many low-income single individuals and couples who are elderly or disabled, Social Security and/or SSI monthly income brings them close to or above the federal poverty level.  For these households who do not have high expenses — for example, because they live in public housing and have no out-of-pocket medical expenses — the food stamp benefit they will be eligible for will be relatively low, perhaps only $10 a month.  If, however, such a household has high shelter expenses, high medical expenses, or both, their monthly food stamp benefit will be significantly higher.  The average Social Security recipient who has medical expenses and receives food stamps qualifies for about $50 a month in benefits.  A typical household with members who are elderly or disabled and very high deductions can receive closer to $90 a month or more in food stamps.[4]

Applying for Food Stamps

States administer the Food Stamp Program through local welfare offices.  Because households with members who are elderly or disabled tend to have more stable income and circumstances than other low-income populations, and because they may have difficulty traveling to the welfare offices and otherwise complying with program requirements, federal regulations require that states make accommodations to serve them.

Applications for food stamps are available at local welfare offices, at Social Security Administration field offices, through some local community organizations, and on-line in most states.[5]  Applications may be filed in-person at the welfare office, through the mail, faxed, or on-line in a couple of states.  Individuals may designate other people, such as family members or other trusted adults, to serve as their “authorized representative” with respect to completing the application process and other functions.

Generally, an interview is required for initial certification, but states must waive the in-office face-to-face interview and conduct the interview over the telephone for anyone that would experience a hardship in traveling to an in-office interview.  States may further choose to have a policy of conducting interviews over the telephone for all households that have no earnings and where all members are elderly or disabled.  Food Stamp applicants will typically have to document some of the information they provide on the application.  Typically, once a household with members who are elderly or disabled is determined eligible for food stamps it will need to reapply for food stamps every 12 to 24 months.

Food stamp benefits can be used to purchase food in retail supermarkets, grocery stores, and convenience stores across the country.  Ninety-five percent of food stamp benefits are provided on electronic benefit transfer (EBT) cards, which can be swiped like debit or credit cards at the check-out counter.

Participation Rates

Food stamp participation rates for people who are elderly or disabled are relatively low and have been falling in recent years.  Overall, USDA estimates that only 28 percent of eligible elderly individuals and 49 percent of adults with disabilities participated in the Food Stamp Program in 2001.  This is a modest decline from 1999 when USDA estimated that 31 percent of elderly and 55 percent of adults with disabilities participated in the program.[6]

These low participation rates occur despite the fact that some eligible non-participants are eligible for a sizable food stamp benefit.  A USDA study in 2002 found that more than one-third (36 percent) of elderly individuals who are eligible for the Food Stamp Program but do not participate would receive more than $50 a month.[7] 

Households with members who are elderly or disabled that receive SSI benefits are much more likely to participate in food stamps.  According to USDA, such households have participation rates of 80 percent or higher.  In addition, about half of the states have implemented, or are in the process of implementing, simplified enrollment procedures, known as “Combined Application Procedures” for SSI recipients under food stamp waiver authority.   These projects use information from the Social Security Administration to conduct outreach and enroll eligible SSI recipients in food stamps using simplified rules and procedures.

Thus, the low-income population who are elderly or disabled and eligible for (but do not receive) food stamps is dominated by Social Security recipients and other low-income seniors and people with disabilities who do not already have contact with the agencies that administer food stamps because they do not participate in SSI or Medicaid.  In total, USDA estimates that in 2001 there were 4.2 million elderly individuals and 1.7 million adults with disabilities who were eligible for food stamps but did not participate in the program.  Many of these people are the same people who have the most to gain by enrolling in the Transitional Assistance associated with the discount drug cards.  There is significant overlap with the 4.7 million people CMS anticipates will receive Transitional Assistance.


 Opportunities offered by the Medicare Drug Benefit

The new Medicare drug benefit received a great deal of attention as it was debated the past several years, and will continue to be in the news as implementation gets underway over the next several years.  The Transitional Assistance will potentially be a significant new source of financial assistance for low-income Medicare beneficiaries, so there is likely to be a great deal of interest in applying for benefits.  The vast majority of individuals eligible for this assistance through Medicare-sponsored discount drug cards will also be income-eligible for food stamps, so there is a unique opportunity to conduct outreach to this population to inform them of the availability of food stamps as another source of assistance in helping them make ends meet.

Some of the parties that will be involved and that could take advantage of these opportunities include:

It is important to keep in mind that the implementation of the Medicare drug benefit is a two-staged process.  Beyond the linkage with the Transitional Assistance benefit, additional opportunities will emerge beginning in 2006 when state Medicaid agencies and the Social Security Administration will administer the eligibility test for the low-income assistance portion of the on-going Part D benefit.



Connecting people who get Transitional Assistance with t0he Food Stamp Program is not without its challenges.

Despite these challenges, finding ways to connect low-income seniors and people with disabilities to the Food Stamp Program is an important goal.  With the help of the Drug Card, Transitional Assistance, and food stamps these individuals will struggle less to get by each day.  Helping them meet their food costs can also improve their health outcomes.


Other Benefits that May Be Available to This Population

In addition to food stamps, low-income Medicare beneficiaries who are eligible for the Discount Drug card and Transitional Assistance also may be eligible for a range of other federal, state, and local assistance.  For example:

By finding ways to package these benefits together states and non-profit groups working with seniors and people with disabilities can leverage increased enrollment in all of the programs.



Over the next six months and beyond, the federal government will roll out a temporary Discount Drug card with $600 a year in assistance for low-income Medicare beneficiaries.  Numerous parties will be involved in designing the program, delivering the drug cards and the assistance, and educating and informing low income Medicare beneficiaries about the benefit.  These activities provide a one-time opportunity to inform low-income elderly people and people with disabilities who have trouble making ends meet that they might be eligible for additional help through the Food Stamp and other programs.

In addition, beginning in 2006 the permanent Medicare Part D Drug benefit will go into effect.  It also will provide additional assistance to low-income beneficiaries that will be administered by state Medicaid agencies and the Social Security Administration will administer.  That program also offers many new opportunities to enroll eligible seniors and persons with disabilities in the Food Stamp Program.

End Notes:

[1] The Henry J. Kaiser Family Foundation, Medicare Fact Sheet: Medicare at a Glance, April 2003. 

[2] U.S. Department of Agriculture, Food and Nutrition Service, Trends in Food Stamp Program Participation Rates: 1999 to 2001, July 2003. 

[3] See http://www.cms.hhs.gov/discountdrugs/overview.asp

[4] Based on CBPP analysis of the FY2002 Food Stamp Quality Control Household Characteristics data.

[5] See CBPP, www.foodstamps.gov: State Government Websites on the Food Stamp Program, available at http://www.cbpp.org/8-25-03fa.htm for information on states’ online applications.

[6] U.S. Department of Agriculture, Food and Nutrition Service, Trends in Food Stamp Program Participation Rates: 1999 to 2001, July 2003.

[7] U.S. Department of Agriculture, Food and Nutrition Service, Elderly Participation and the Minimum Benefit, November 2002.

[8] A few states have taken advantage of flexibility in the Food Stamp Program to set a less restrictive asset test.  For example, the food stamp asset test in Texas is $5,000.