Medicare Part D Low-Income Subsidy: SSA Continues to Approve	 
Applicants, but Millions of Individuals Have Not Yet Applied	 
(22-MAY-08, GAO-08-812T).					 
                                                                 
To help the elderly and disabled with prescription drug costs,	 
the Congress passed the Medicare Prescription Drug, Improvement  
and Modernization Act of 2003 (MMA), which created a voluntary	 
outpatient prescription drug benefit (Medicare Part D). A key	 
element of the prescription drug benefit is the low-income	 
subsidy, or "extra help," available to Medicare beneficiaries	 
with limited income and resources to assist them in paying their 
premiums and other out-of-pocket costs. To assess the Social	 
Security Administration's (SSA) implementation of the subsidy,	 
GAO is providing information on (1) the number of applicants	 
approved for or denied the low-income subsidy and (2) challenges 
of identifying individuals eligible for the subsidy and targeting
outreach efforts. This statement is based on a prior GAO report  
on the subsidy and associated spending issued in May 2007,	 
selected aspects of which we updated in May 2008.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-812T					        
    ACCNO:   A82173						        
  TITLE:     Medicare Part D Low-Income Subsidy: SSA Continues to     
Approve Applicants, but Millions of Individuals Have Not Yet	 
Applied 							 
     DATE:   05/22/2008 
  SUBJECT:   Appeals						 
	     Appeals process					 
	     Beneficiaries					 
	     Data collection					 
	     Data integrity					 
	     Disadvantaged persons				 
	     Elderly persons					 
	     Eligibility determinations 			 
	     Health care programs				 
	     Income statistics					 
	     Income taxes					 
	     Information disclosure				 
	     Medicare						 
	     Prescription drugs 				 
	     Strategic planning 				 
	     Subsidies						 
	     Program goals or objectives			 
	     Medicare Part D					 

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GAO-08-812T


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entitled 'Medicare Part D Low-Income Subsidy: SSA Continues to Approve 
Applicants, but Millions of Individuals Have Not Yet Applied' which was 
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Testimony: 

Before the Special Committee on Aging, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:30 a.m. EDT: 

Thursday, May 22, 2008: 

Medicare Part D Low-Income Subsidy: 

SSA Continues to Approve Applicants, but Millions of Individuals Have 
Not Yet Applied: 

Statement of Barbara D. Bovbjerg, Director Education, Workforce, and 
Income Security Issues: 

GAO-08-812T: 

GAO Highlights: 

Highlights of GAO-08-812T, a report to the Special Committee on Aging, 
U.S. Senate. 

Why GAO Did This Study: 

To help the elderly and disabled with prescription drug costs, the 
Congress passed the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003 (MMA), which created a voluntary outpatient 
prescription drug benefit (Medicare Part D). A key element of the 
prescription drug benefit is the low-income subsidy, or ï¿½extra help,ï¿½ 
available to Medicare beneficiaries with limited income and resources 
to assist them in paying their premiums and other out-of-pocket costs. 

To assess the Social Security Administrationï¿½s (SSA) implementation of 
the subsidy, GAO is providing information on (1) the number of 
applicants approved for or denied the low-income subsidy and (2) 
challenges of identifying individuals eligible for the subsidy and 
targeting outreach efforts. 

This statement is based on a prior GAO report on the subsidy and 
associated spending issued in May 2007, selected aspects of which we 
updated in May 2008. 

What GAO Found: 

Of the approximately 7.2 million applicants for the low-income subsidy, 
SSA approved approximately 2.8 million as of March 2008, and SSA has 
improved some key measures for its subsidy application processes. SSA 
approved about 570,000 applicants, denied about 403,000 applicants, and 
determined that no decision was required for about 281,000 applicants 
in fiscal year 2007. The table below shows that excess income was the 
primary reason applicants were denied benefits, while many other 
applicants were denied benefits because their resources exceeded 
program limits. Further, SSA has collected data and established some 
goals to monitor its progress in implementing and administering the 
subsidy benefit. 

No reliable data are available to help SSA identify the eligible 
population for its outreach efforts, and millions who may be eligible 
have not yet applied. SSA maintains that it would not be able to 
establish specific goals and measures for its outreach activities, as 
we recommended in our May 2007 report because, of the lack of reliable 
data on the total eligible population. Responding to another of our 
recommendations, SSA is working with the Internal Revenue Service to 
determine if tax data can help target individuals eligible for the 
subsidy. The Centers for Medicare & Medicaid Services and the 
Congressional Budget Office have estimated, respectively, that about 
2.6 million to over 4 million individuals who may qualify for the 
subsidy are not receiving it. Various barriers, such as reluctance to 
disclose personal financial information or lack of knowledge of the 
subsidy, may prevent potentially eligible Medicare beneficiaries from 
applying for the subsidy. To solicit applications from individuals 
potentially eligible for the subsidy, SSA conducted an extensive 
outreach campaign from May 2005 to August 2006, but has decreased its 
outreach activities since then. Staffing constraints in SSA field 
offices may also limit SSAï¿½s ability to assist individuals with the 
subsidy and conduct local outreach to inform the public about the 
subsidy. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-812T]. For more 
information, contact Barbara Bovbjerg at 202-512-7215 or 
[email protected]. 

[End of section] 

May 22, 2007: 

Mr. Chairman and Members of the Committee: 

I appreciate the opportunity to participate in today's hearing to 
discuss the Social Security Administration's (SSA) progress in 
enrolling individuals in the Medicare Part D Low-Income Subsidy. High 
prescription drug costs can have a detrimental effect on low-income 
seniors and the disabled, who are more likely than others to suffer 
from chronic medical problems requiring prescription drugs. Such high 
costs may cause some elderly patients to forgo or restrict their use of 
prescription drugs. To help the elderly and disabled with these costs, 
the Congress passed the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA).[Footnote 1] MMA enabled Medicare 
beneficiaries to enroll voluntarily in drug plans sponsored by private 
health insurance companies. The benefit includes a low-income subsidy, 
or "extra help," to assist Medicare beneficiaries with limited income 
and resources (also called assets) in paying their premiums and other 
out-of-pockets costs. 

The Department of Health and Human Services and its Centers for 
Medicare & Medicaid Services (CMS) are largely responsible for 
implementing the new drug plan, called Medicare Part D, and SSA 
administers the low-income subsidy. SSA is responsible for conducting 
outreach efforts to identify and notify individuals of the subsidy's 
availability, taking applications, making subsidy eligibility 
determinations, resolving appeals, and ensuring continued subsidy 
eligibility. SSA also withholds Part D premiums from Social Security 
benefits for beneficiaries who select this option. My testimony will 
address (1) the number of applicants approved for or denied the low- 
income subsidy and (2) the challenges of identifying individuals 
eligible for the subsidy and targeting outreach efforts. 

My comments are based largely on a prior GAO report issued in May 2007 
addressing SSA's implementation of the low-income subsidy and 
associated spending.[Footnote 2] We updated selected aspects of the 
work during May 2008. We conducted our work in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

Summary: 

Of the 7.2 million applicants for the low-income subsidy, SSA approved 
2.8 million of them, and SSA has improved some key measures for its 
subsidy application processes. SSA approved about 570,000 applicants, 
denied about 403,000 applicants, and determined that no decision was 
required for about 281,000 applicants in fiscal year 2007. In a 2007 
SSA study of low-income subsidy denials, SSA found that excess income 
was the primary reason for 62 percent of applicant denials and about 24 
percent of these denied applicants were within $1,500 of the income 
limit. Excess resources were the primary reason for 16 percent of 
applicant denials and nearly 30 percent of these denied applicants were 
within $5,000 of the resource limit. Approximately 9 percent had both 
excess income and resources. Further, SSA has collected key data and 
established some goals to monitor its progress in implementing and 
administering the subsidy benefit. 

No reliable data are available to help SSA target its outreach efforts, 
and millions who may be eligible for the subsidy have not yet applied. 
SSA maintains that it is not able to establish specific goals and 
measures for its outreach activities, as we recommended in our May 2007 
report, because of the lack of reliable data on the total eligible 
population. However, responding to another of our recommendations, SSA 
is working with the Internal Revenue Service to determine whether tax 
data can help to target individuals eligible for the subsidy. According 
to CMS and Congressional Budget Office estimates, respectively, about 
2.6 million to over 4 million individuals who may qualify for the 
subsidy are not receiving it. Various barriers, such as a reluctance to 
disclose personal financial information, and inadequate availability of 
one-on-one assistance for completing the application, may prevent 
potentially eligible Medicare beneficiaries from applying for the 
subsidy. To solicit applications from individuals potentially eligible 
for the subsidy, SSA conducted an extensive outreach campaign, from May 
2005 to August 2006, but has decreased its outreach activities since 
then due to limited funding. Staffing constraints in SSA field offices 
may also limit SSA's ability to assist individuals with the subsidy and 
conduct local outreach to inform the public about the subsidy. 

Background: 

All Medicare beneficiaries entitled to benefits under Medicare Part A 
or enrolled in Part B are eligible to enroll in Medicare Part 
D.[Footnote 3] Medicare beneficiaries who qualify for full coverage 
under their state's Medicaid program,[Footnote 4] as well as Medicare 
beneficiaries who qualify for more limited Medicaid coverage, 
Supplemental Security Income (SSI), or state Medicare Savings Programs 
are automatically enrolled in a Part D prescription drug plan by 
CMS,[Footnote 5] automatically qualify for the full subsidy of their 
premium and deductible, and do not need to file an application. They 
are referred to as "deemed." 

Other Medicare beneficiaries who do not automatically qualify for the 
subsidy (i.e., who are not deemed) must apply and meet the income and 
resource requirements. These beneficiaries generally qualify if they 
have incomes below 150 percent of the federal poverty level and have 
limited resources. Generally, in 2008, individuals qualify if they have 
an income up to $15,600 for an individual and $21,000 for a couple and 
if they have resources up to $11,990 for an individual or $23,970 for a 
couple.[Footnote 6] The amount of the subsidy for premiums, 
deductibles, copayments, and catastrophic coverage varies depending on 
income and resources. 

Individuals generally apply for the benefit directly through SSA, 
although they may also apply through their state Medicaid office. The 
agency that receives an application, whether SSA or a state Medicaid 
agency, is responsible for making initial subsidy determinations and 
deciding appeals and redeterminations. Those who apply through SSA may 
submit their subsidy application using SSA's paper application or an 
Internet application form. Applicants may also have their information 
entered electronically by visiting an SSA field office or by calling 
SSA's toll-free phone line. According to state Medicaid officials we 
spoke with, they encouraged beneficiaries to apply for the subsidy 
through SSA whenever possible. As of March 2007, only the Colorado and 
Kansas state Medicaid agencies had made Part D subsidy determinations. 

Under the MMA, the Congress provided SSA with a special $500 million 
appropriation from the Federal Hospital Insurance Trust Fund and the 
Federal Supplementary Medical Insurance Trust Fund to assist SSA in 
implementing its Part D responsibilities for fiscal years 2004 and 
2005, but later extended the appropriation to fiscal year 2006. Since 
January 2006, SSA officials told us that the agency has had to draw on 
its overall administrative appropriation to support its Part D 
activities. SSA informed us that the agency now has a mechanism to 
track costs for low-income subsidy applications, and estimates that it 
cost the agency $175 million to administer the subsidy in fiscal year 
2007, and that it expects similar costs in fiscal year 2008. 

SSA Continues to Approve Applications and Improve Processing Efforts 
and Has Improved Some Measures for Processing Benefits: 

SSA continues to approve low-income subsidy applications; of the 
applicants who were denied benefits, most exceeded income limits and 
others exceeded resource limits. To monitor its progress in 
implementing and administering the subsidy benefit, SSA has collected 
key data and established some goals. 

Excess Income Was the Predominant Reason That Applicants Were Denied 
the Subsidy in Fiscal Year 2007: 

Of the approximately 7.2 million applicants filing for the subsidy as 
of March 2008, SSA approved 2.8 million.[Footnote 7] SSA received 1.3 
million new applications in fiscal year 2007, approving approximately 
570,000 (43 percent), denying approximately 403,000 (31 percent), and 
made no decision for approximately 281,000 (22 percent) because 
applicants had submitted duplicate applications among other 
reasons.[Footnote 8] 

According to a recent SSA study of individuals who applied for the 
subsidy in 2007 and where SSA made a decision by January 2008, SSA 
denied approximately 416,000 applicants. The most common reasons for 
denials were excessive income and resources.[Footnote 9] As Table 1 
shows, excess income was the primary reason for denials, and excess 
resources were the reason in approximately 17 percent of the denials. 

Table 1: Reason for Denials for Individuals Who Applied in 2007, in 
Percentages: 

Application: Individual; 
Income: 62.2%; 
Resources: 20.2; 
Both income and resources: 8.7; 
Other reason[A]: 8.9; 
Total: 100%; 
Number of persons: 295,559. 

Application: Couple; 
Income: 61.5%; 
Resources: 8.0; 
Both income and resources: 10.9; 
Other reason[A]: 19.7; 
Total: 100%; 
Number of persons: 120,934. 

Application: All denied applicants; 
Income: 62.0%; 
Resources: 16.6; 
Both income and resources: 9.4; 
Other reason[A]: 12.1; 
Total: 100%; 
Number of persons: 416,493. 

Source: Social Security Administration's analysis of Medicare Database, 
February 1, 2008. 

Totals may be greater than 100 percent due to rounding. 

[A] This included applicants that were denied because they were not 
Medicare beneficiaries, were not a U.S. resident, or because they 
failed to provide SSA with documentation to complete its subsidy 
determination. 

[End of table] 

For denials based on excess income, about 10 percent of applicants were 
within $500 of the income limit. About 98 percent of applicants with 
excess income received Social Security benefits, and 35 percent 
received pensions from sources other than veterans' or Social Security 
benefits. Table 2 shows the extent to which applicants were denied 
subsidy eligibility because their income was too high. For those 
denied, the median excess income was $4,572. 

Table 2: Amount by Which Income Exceeded the Subsidy Limits when Income 
Was a Reason for Denial, in Percentages of Persons Denied: 

Excess annual income of denied applicants in 2007: $20,000 or more; 
Single applicant: 7.5%; 
Couple: 7.2%; 
All: 7.3%. 

Excess annual income of denied applicants in 2007: $15,000 to <$20,000; 
Single applicant: 4.8; 
Couple: 4.5; 
All: 4.7. 

Excess annual income of denied applicants in 2007: $10,000 to <$15,000; 
Single applicant: 10.8; 
Couple: 9.3; 
All: 10.4. 

Excess annual income of denied applicants in 2007: $7,500 to <$10,000; 
Single applicant: 10.1; 
Couple: 9.2; 
All: 9.8. 

Excess annual income of denied applicants in 2007: $5,000 to <$7,500; 
Single applicant: 15.7; 
Couple: 14.7; 
All: 15.4. 

Excess annual income of denied applicants in 2007: $3,000 to <$5,000; 
Single applicant: 11.3; 
Couple: 16.7; 
All: 12.9. 

Excess annual income of denied applicants in 2007: $1,500 to <$3,000; 
Single applicant: 14.4; 
Couple: 16.8; 
All: 15.1. 

Excess annual income of denied applicants in 2007: $1,000 to <$1,500; 
Single applicant: 6.6; 
Couple: 6.5; 
All: 6.6. 

Excess annual income of denied applicants in 2007: $500 to <$1,000; 
Single applicant: 8.2; 
Couple: 7.2; 
All: 7.9. 

Excess annual income of denied applicants in 2007: < $500; 
Single applicant: 10.8; 
Couple: 7.9; 
All: 9.9. 

Excess annual income of denied applicants in 2007: Total; 
Single applicant: 100%; 
Couple: 100%; 
All: 100%. 

Excess annual income of denied applicants in 2007: Median excess 
income; 
Single applicant: $4,751; 
Couple: $4,335; 
All: $4,572. 

Excess annual income of denied applicants in 2007: Mean excess income; 
Single applicant: $9,136; 
Couple: $8,753; 
All: $9,023. 

Excess annual income of denied applicants in 2007: Number of persons; 
Single applicant: 209,539; 
Couple: 87,594; 
All: 297,133. 

Source: Social Security Administration's analysis of Medicare Database, 
February 1, 2008. 

Totals may be greater than 100 percent due to rounding. 

Note: The mean is calculated excluding about 130 outliers over 
$1,000,000. 

[End of table] 

For denials based solely on excess resources, nearly 6 percent of 
applicants were within $500 of the resource limit. Table 3 shows the 
extent to which applicants were denied subsidy eligibility because 
their resources were too great. For those denied, the median excess 
resources were $13,690. Bank accounts and investments, which included 
stocks, bonds, and individual retirement account balances were 
responsible for about 57 percent of the excess resource denials. 

Table 3: Amount by Which Resources Exceeded Subsidy Limits when 
Itemized Resources Were the Only Reason for Denial, in Percentages of 
Persons Denied: 

Excess Resources of Denied Applicants in 2007: $20,000 or more; 
Single Applicant: 39.2%; 
Couple: 48.9%; 
All: 40.2%. 

Excess Resources of Denied Applicants in 2007: $15,000 to <$20,000; 
Single Applicant: 7.1; 
Couple: 6.9; 
All: 7.1. 

Excess Resources of Denied Applicants in 2007: $10,000 to <$15,000; 
Single Applicant: 10.5; 
Couple: 7.8; 
All: 10.2. 

Excess Resources of Denied Applicants in 2007: $7,500 to <$10,000; 
Single Applicant: 6.6; 
Couple: 6.1; 
All: 6.5. 

Excess Resources of Denied Applicants in 2007: $5,000 to <$7,500; 
Single Applicant: 6.5; 
Couple: 7.0; 
All: 6.5. 

Excess Resources of Denied Applicants in 2007: $3,000 to <$5,000; 
Single Applicant: 8.3; 
Couple: 6.6; 
All: 8.1. 

Excess Resources of Denied Applicants in 2007: $1,500 to <$3,000; 
Single Applicant: 7.1; 
Couple: 8.5; 
All: 7.3. 

Excess Resources of Denied Applicants in 2007: $1,000 to <$1,500; 
Single Applicant: 4.0; 
Couple: 2.0; 
All: 3.7. 

Excess Resources of Denied Applicants in 2007: $500 to <$1,000; 
Single Applicant: 4.8; 
Couple: 3.1; 
All: 4.6. 

Excess Resources of Denied Applicants in 2007: < $500; 
Single Applicant: 6.0; 
Couple: 3.3; 
All: 5.7. 

Excess Resources of Denied Applicants in 2007: Total; 
Single Applicant: 100%; 
Couple: 100%; 
All: 100%. 

Excess Resources of Denied Applicants in 2007: Median excess resources; 
Single Applicant: $13,290; 
Couple: $18,934; 
All: $13,690. 

Excess Resources of Denied Applicants in 2007: Mean excess resources; 
Single Applicant: $40,904; 
Couple: $57,754; 
All: $42,962. 

Excess Resources of Denied Applicants in 2007: Number of persons; 
Single Applicant: 37,731; 
Couple: 5,267; 
All: 42,998. 

Source: Social Security Administration's analysis of Medicare Database, 
February 1, 2008. 

Totals may be greater than 100 percent due to rounding. 

Note: This table excludes people who were denied because they checked 
the box on the application stating that their resources exceeded the 
established limits. The mean is calculated excluding about 200 outliers 
over $1,000,000. 

[End of table] 

SSA Has Made Some Improvements for Measuring Subsidy Processes, but 
Lacks Measures in Certain Areas: 

We reported, in May 2007,[Footnote 10] that SSA had established 
application processes for determining low-income subsidy eligibility, 
reviewing appeals, and conducting redeterminations; however, it had not 
established some key management tools to monitor progress of all of its 
efforts. To enable agencies to identify areas in need of improvement, 
GAO internal control standards state that agencies should establish and 
monitor performance measures and indicators.[Footnote 11] Accordingly, 
agencies should compare actual performance data against expected goals 
and analyze the differences. 

While SSA had tracked the progress of subsidy determinations since it 
began processing applications in July 2005, it did not have goals for 
measuring the processing time for these applications until March 2007. 
SSA's goal is to process 75 percent of the subsidy applications in 60 
days and reported that it processed 93 percent of determinations within 
60 days during the first 6 months of fiscal year 2008. SSA had also 
been tracking the amount of time for resolving appeals of subsidy 
denials, but also did not have a performance goal to assess the 
timeliness of appeals decisions. In response to our recommendation, SSA 
established a goal of processing 75 percent of appeals within 60 days-
-similar to its goal for processing subsidy applications. SSA reported 
that 74.5 percent of appeals were processed in 60 days during the first 
6 months of fiscal year 2008. 

SSA tracks various results from the redeterminations process, such as 
the number of decisions made, and the number and level of continued 
subsidies. According to the MMA and SSA regulations, all recipients of 
the subsidy are required to have their eligibility redetermined within 
one year after SSA first determines their eligibility.[Footnote 12] 
Future redeterminations are required to be conducted at intervals 
determined by the Commissioner. SSA's regulations provide that these 
periodic redeterminations be based on the likelihood that an 
individual's situation may change in a way that affects subsidy 
eligibility. Additionally, SSA's regulations provide that unscheduled 
redeterminations may take place at any time for individuals who report 
a change in their circumstances, such as marriage or divorce. In May 
2007, we recommended that SSA collect data on the processing time for 
individual redetermination decisions, and establish performance 
standards for such processing time. SSA disagreed with our 
recommendation, stating that the agency monitors the time for 
completing the overall redetermination cycle, providing adequate 
management controls. While SSA still does not collect processing time 
data for individual redetermination decisions, an SSA official recently 
told us that it is now the agency's goal to complete redetermination 
decisions before the end of each year, except for people who do not 
respond to SSA's inquiries. 

No Reliable Data Are Available to Identify Eligible Population for 
Outreach Efforts, and Millions May Have Not Yet Applied: 

No reliable data are available to help SSA identify the eligible 
population for its outreach efforts, and millions who may be eligible 
have not yet applied, in part due to privacy concerns and application 
complexity. SSA is working with the Internal Revenue Service (IRS) to 
determine whether tax data can help target individuals eligible for the 
subsidy. According to available estimates, millions of individuals who 
may qualify for the subsidy have not yet applied. Various barriers, 
such as a reluctance to share personal financial information, may 
discourage some individuals from applying. Furthermore, SSA initially 
conducted a focused outreach campaign, but now incorporates such 
efforts into its overall Social Security outreach including work with 
third parties to publicize the subsidy and targeted outreach events on 
Mother's Day and Father's Day. 

SSA Does Not Have Data to Narrowly Target Eligible Population: 

SSA does not have access to data that might help it to narrowly target 
the eligible population. In the absence of reliable data for 
identifying the eligible population, in 2006 SSA broadly targeted 18.6 
million individuals who might be eligible for the subsidy, which was an 
overestimate. SSA identified the target population by using income data 
from various government sources to screen out Medicare beneficiaries 
whose income made them ineligible for the Part D subsidy.[Footnote 13] 
SSA realized that using these data sources would result in an 
overestimate of the number of individuals who might qualify for the 
subsidy, because the data provided limited information on individuals' 
resources or nonwage income. SSA officials said they took this approach 
to ensure that all Medicare beneficiaries who were potentially eligible 
for the subsidy were made aware of the benefit and had an opportunity 
to apply for it. 

SSA officials said that they would have preferred to specifically 
target Medicare beneficiaries who were more likely to be eligible for 
the subsidy by using tax data from IRS on individuals' wage, interest, 
and pension income. Current law permits SSA to obtain income and asset 
data from IRS to assist in verifying information provided on subsidy 
applications.[Footnote 14] The law, however, prohibits IRS from sharing 
such data with SSA in the absence of a submitted application. According 
to SSA officials, such data would allow SSA to identify individuals to 
target outreach more directly and to estimate how many individuals may 
qualify for the subsidy. However, IRS officials told us that its data 
have many limitations that could affect their usefulness. For example, 
IRS officials said that they have limited data on assets for 
individuals whose income is less than $20,000 because these individuals 
do not typically have interest income, private pensions, or dividend 
income from stocks that could help SSA in estimating an individual's 
potential asset level. Given these limitation, IRS officials stated 
that their tax data was more likely to identify individuals who would 
not quality for the subsidy, rather than those who would. In November 
2006, the HHS Office of Inspector General reported that legislation is 
needed to provide SSA and CMS access to income tax data to help the 
agencies more effectively identify beneficiaries potentially eligible 
for the subsidy.[Footnote 15] 

In our May 2007 report, we recommended that SSA develop a comprehensive 
plan, with specific performance goals and measures, to detail the 
agency's outreach strategy for enrolling additional individuals who 
qualify for the subsidy. While SSA agreed with the recommendation in 
theory, it maintains that it would be unable to implement specific 
goals and measures due to the lack of reliable data on the eligible 
population. SSA recently informed us that is still the agency's 
position. We also recommended that SSA and IRS work together to assess 
the extent to which IRS tax data would help SSA to identify individuals 
who might qualify for the subsidy, possibly aiding SSA in better 
targeting outreach efforts. In implementing our recommendation, SSA 
provided IRS with a random sample of 200,000 individuals (of 
approximately 19 million potentially eligible) who might qualify for 
the subsidy. IRS then provided SSA Form 1098 and 1099 data for these 
individuals, with identifying information removed. SSA could then use 
its methodology for IRS to estimate potential subsidy eligibility. The 
Form 1098 and 1099 information will help SSA determine if individuals 
have pensions and resources that exceed the subsidy threshold. IRS is 
expecting to complete its preliminary analysis and share the 
information with SSA by the end of June 2008. 

Millions of Eligible Individuals May Not Be Taking Advantage of the 
Subsidy: 

Millions of individuals potentially eligible for the low-income subsidy 
are still not receiving it. Although no reliable data exist on the 
total eligible population, CMS estimated that about 2.6 million 
individuals may be eligible but not receiving the subsidy. Based on a 
2004 Congressional Budget Office (CBO) estimate, 4.4 million 
individuals may be eligible and not receiving the subsidy.[Footnote 16] 

Several barriers may prevent potentially eligible Medicare 
beneficiaries from applying for the subsidy. In our May 2007 report, we 
stated that some individuals were reluctant to apply because they did 
not want to share their personal financial information for fear that an 
inadvertent error on the application could subject them to prosecution 
under the application's perjury clause. However, in December 2007 SSA 
revised the clause removing the threat of imprisonment for false 
statements. A 2007 Mathematica study conducted for AARP, also found 
that reluctance to share personal financial information, the stigma 
associated with applying for public benefits, and inadequate 
availability of one-on-one assistance for completing the subsidy 
application, and resource limits affected individuals' decision not to 
apply for the subsidy.[Footnote 17] A CMS study also found that 
individuals do not apply if they are currently not taking prescription 
medications because they do not believe that they need the benefit and 
are discouraged by the assumed high Part D drug costs.[Footnote 18] 

SSA Initially Conducted Focused Outreach Efforts, But Now Incorporates 
Such Efforts into Overall Social Security Outreach: 

From the outset of the low-income subsidy program, SSA conducted a 
broad outreach campaign to inform as many potentially eligible people 
as possible about the subsidy and how to apply for it. SSA conducted 
its initial outreach campaign from May 2005 to August 2006. To solicit 
subsidy applications, SSA sent targeted mailings, which included an 
application for the subsidy and instructions on how to apply, to 18.6 
million individuals identified as potentially eligible. SSA also 
conducted over 76,000 outreach events in collaboration with federal, 
state, and local partners, such as CMS, state Medicaid agencies, state 
health insurance programs, and advocacy groups for Medicare 
beneficiaries, among other efforts. The number of outreach events has 
declined, from a high of 12,150 in July 2005 to 230 at the completion 
of the campaign in August 2006. 

Today, SSA continues to solicit applications, but through the agency's 
ongoing general outreach activities, working with third parties and 
special targeted events around Mother's Day and Father's Day, though 
not through a dedicated campaign. Current activities include: 

* mailing notices annually that include information about the low- 
income subsidy to low-income Medicare beneficiaries. 

* mailing approximately 100,000 applications each month to 
beneficiaries attaining initial Medicare eligibility after screening 
them to determine that their income may be below 150 percent of the 
federal poverty level. 

* including information on the subsidy in its Cost-of-Living Adjustment 
letter sent each December to over 50 million Medicare beneficiaries. 

* developing new outreach material for capturing the attention of 
Medicare beneficiaries regarding the subsidy. 

* conducting a "Show Someone You Love How Much You Care" campaign to 
inform relatives and caregivers about the low-income subsidy. This 
campaign has focused on Mother's Day and Father's Day in 2007 and 2008. 

* using automated phone call technology to call potentially eligible 
individuals to inform them about the subsidy. SSA field office staff 
will call individuals who do not respond. This initiative will begin in 
June 2008. 

* using a new special pamphlet, designed with a mailer insert that is 
placed at pharmacies, hospitals, and medical practices, to enable 
Medicare beneficiaries to request a low-income subsidy application 
without calling or visiting SSA. 

Recent staffing reductions in field offices may have left SSA with 
limited resources to assist individuals with the subsidy and conduct 
local outreach efforts.[Footnote 19] With staffing reductions, much of 
SSA's work is focused on its core workload, which includes processing 
applications for Social Security benefits and for Social Security 
numbers. Between 2005 and 2007, field office staffing declined by 7.1 
percent. We recently testified that this staffing reduction may have 
increased customer waiting time in field offices. Further, during the 
course of our recent study, several staff reported that they often did 
not have adequate time to spend with customers to explain information. 
Although SSA hired 2,200 new field office staff to assist with the 
implementation of Medicare Part D, these staff are now focused on the 
full range of field office workloads and are therefore not available to 
specifically serve the needs of individuals seeking assistance with the 
low-income subsidy. 

Individuals responding to Mathematica's 2007 study stated that the 
availability of local SSA staff to help low-income subsidy applicants 
is important because SSA staff may provide more personalized assistance 
than staff in SSA's Teleservice Centers, which operate the agency's 
toll-free telephone service. However, many of the study respondents 
reported long lines at crowded SSA field offices or difficulty getting 
through on local field office telephone lines. Mathematica reported 
that several respondents reported that SSA field offices were 
overwhelmed by people seeking services other than the low-income 
subsidy. In our May 2008 testimony on SSA field offices, we also 
reported that staffing reductions have adversely affected field 
offices' ability to serve customers. In particular, we reported that 
between 2002 and 2006, the average waiting time for field office 
service increased by 40 percent from 15 minutes to 21 minutes, and in 
fiscal year 2007, more than 3 million customers waited for over an hour 
to be served, according to SSA data. We also reported that SSA's 2007 
Field Office Caller Survey found that 51 percent of customer calls to 
48 randomly selected field offices went unanswered. 

Conclusions: 

Reaching the millions of people who are forgoing the government's help 
in paying for their prescription drug benefit remains a significant 
challenge. While SSA continues to approve applications for the subsidy, 
the agency's efforts to attract new subsidy applicants have slowed 
significantly since 2006. CMS and CBO estimate, respectively, that 
about 2.6 million to over 4 million individuals who may be eligible for 
the subsidy are still not receiving the benefit. It is not clear how to 
reach the remaining eligible people, and the barriers to identifying 
them and convincing them to sign up remain. While advocacy groups 
encourage a more personalized outreach approach, it may be unrealistic 
to expect SSA to conduct such efforts, given its resource limitations. 
The IRS and SSA study may help determine if tax data could help 
identify individuals who may qualify for the subsidy and target 
outreach efforts. A better understanding of who is eligible could help 
SSA make more efficient use of limited staff resources by targeting 
outreach more narrowly to the eligible population. 

Mr. Chairman, this completes my prepared statement. I would be happy to 
respond to any questions you or other members of the committee may have 
at this time. 

GAO Contacts and Staff Acknowledgments: 

For further information regarding this testimony, please contact 
Barbara D. Bovbjerg, Director, Education, Workforce, and Income 
Security Issues, on (202) 512-7215. Blake Ainsworth, Susannah Compton, 
Mary Crenshaw, Matthew Lee, Lise Levie, Sheila McCoy, and Paul Wright 
also contributed to this statement. 

[End of section] 

Related GAO Products: 

Social Security Administration Field Offices: Reduced Workforce Faces 
Challenges as Baby Boomers Retire. GAO-08-737T. Washington, D.C.: May 
8, 2008. 

Social Security Administration: Policies and Procedures Were in Place 
over MMA Spending, but Some Instances of Noncompliance Occurred. GAO- 
07-986. Washington, D.C.: August 31, 2007. 

Medicare Part D Low-Income Subsidy: Additional Efforts Would Help 
Social Security Improve Outreach and Measure Program Effects. GAO-07- 
555. Washington, D.C.: May 31, 2007. 

Medicare Part D Low-Income Subsidy: Progress Made in Approving 
Applications, but Ability to Identify Remaining Individuals Is Limited. 
GAO-07-986. Washington, D.C.: May 8, 2007. 

Medicare Part D: Challenges in Enrolling New Dual-Eligible 
Beneficiaries. GAO-07-272. Washington, D.C.: May 4, 2007. 

Prescription Drugs: An Overview of Approaches to Negotiate Drug Prices 
Used by Other Countries and U.S. Private Payers and Federal Programs. 
GAO-07-358T. Washington, D.C.: January 11, 2007. 

Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses 
Were Prompt, but Not Consistently Accurate and Complete. GAO-06-710. 
Washington, D.C.: June 30, 2006. 

Medicare: Communications to Beneficiaries on the Prescription Drug 
Benefit Could Be Improved. GAO-06-654. Washington, D.C.: May 3, 2006. 

Social Security Administration: Medicare Part D Subsidies. GAO-06-344R. 
Washington, D.C.: January 13, 2006. 

Medicare: Contingency Plans to Address Potential Problems with the 
Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare 
Drug Coverage. GAO-06-278R. Washington, D.C.: December 16, 2005. 

Medicare: CMS's Beneficiary Education and Outreach Efforts for the 
Medicare Prescription Drug Prescription Drug Discount Card and 
Transitional Assistance Program. GAO-06-139R. Washington, D.C.: 
November 18, 2005. 

Medicare: CMS's Implementation and Oversight of the Medicare 
Prescription Drug Discount Card and Transitional Assistance Program. 
GAO-06-78R. Washington, D.C.: October 28, 2005. 

Retiree Health Benefits: Options for Employment-Based Prescription Drug 
Benefits under the Medicare Modernization Act. GAO-05-205. Washington, 
D.C.: February 14, 2005. 

Medicare Savings Programs: Results of Social Security Administration's 
2002 Outreach to Low-Income Beneficiaries. GAO-04-363. Washington, 
D.C.: March 26, 2004. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 108-173. 

[2] GAO, Medicare Part D Low-Income Subsidy: Additional Efforts Would 
Help Social Security Improve Outreach and Measure Program Effects, GAO-
07-555 (Washington, D.C.: May 31, 2007). 

[3] Individuals who are eligible for Medicare automatically receive 
Hospital Insurance, known as Part A, which helps pay for hospital 
stays, related post-hospital care, home health services, and hospice 
care, and typically does not require a monthly premium. Medicare also 
offers optional insurance under Supplementary Medical Insurance (Part 
B) to cover doctor's services and outpatient care, and requires a 
premium. 

[4] Medicaid is a federal and state program that helps pay medical 
costs for certain low-income people, such as those who are 65 and 
older, the blind, the disabled, and members of families with dependent 
children or qualified pregnant women or children. Prior to the 
effective date of Part D, Medicaid provided coverage for outpatient 
prescription drug costs for persons eligible for that program. 

[5] Medicare Savings Programs are offered by state Medicaid agencies to 
assist people with limited income and resources with their Medicare 
premiums and, in some cases, may also pay Medicare Part A and Part B 
deductibles and coinsurance. 

[6] For 2006, the asset limits were based on three times the resource 
limit of the SSI program for subsidy beneficiaries. For subsequent 
years, the limits are to be updated based on the Consumer Price Index. 
Countable resources include such things as savings, investments, and 
real estate (other than an individual's primary residence). Countable 
resources do not include such things as a car, a burial plot or limited 
funds set aside for burial expenses, or certain other personal 
possessions. 

[7] The number of applications, applicants, approvals and denials 
differs from the number of individuals involved. This is because the 
same individual may submit multiple applications as a result of changes 
to their automatic eligibility status or as a result of losing their 
eligibility for the subsidy based on SSA's redetermination. On the 
other hand, one application can involve multiple applicants within the 
same household. 

[8] In some instances, SSA canceled applications, including when such 
applications were withdrawn by the applicant. 

[9] The study was based on the Social Security Administration's 
Medicare Database, and included the full universe of people who applied 
for the low-income subsidy during calendar year 2007 and whose 
applications had been denied by the end of January 2008. 

[10] GAO, GAO-07-555. 

[11] GAO, Internal Control Standards: Internal Control Management and 
Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001). 

[12] This does not include individuals who continue to be deemed or 
automatically eligible for the subsidy. Individuals who report changes 
to SSA regarding their benefit status are also excluded from the 
initial redetermination process since they are redetermined as a result 
of the change. 

[13] SSA obtained income data from its earnings records, as well as 
data from the Office of Personnel Management, the Department of 
Veterans Affairs, the Railroad Retirement Board, and the Office of 
Child Support Enforcement of the Department of Health and Human 
Services. 

[14] Under 26 U.S.C. ï¿½ 6103(l)(7)(D), IRS may only provide tax return 
information to SSA for purposes of, and to the extent necessary in, 
determining the eligibility for or the correct amount of benefits 
provided through the subsidy program. In signing the application form, 
individuals acknowledge that SSA will compare the information reported 
by them on the form to information supplied by federal, state, and 
local government agencies, including IRS. 

[15] Department of Health and Human Services, Office of Inspector 
General, Identifying Beneficiaries Eligible for the Medicare Part D Low-
Income Subsidy, OEI-03-06-00120 (Washington, D.C.: Nov. 17, 2006). 

[16] Congressional Budget Office, A Detailed Description of CBO's Cost 
Estimate for the Medicare Prescription Drug Benefit, table 8 
(Washington, D.C.: July 2004). The data were projected for calendar 
year 2006. CBO estimated that an overall total of 14.2 million 
beneficiaries would be eligible for the subsidy in 2006.We derived the 
CBO estimate by subtracting 8.4 million beneficiaries that CMS 
estimated in January 2008 were deemed for the subsidy, or had 
comparable coverage from other federal programs, from the sources' 
original estimates of all eligible beneficiaries. 

[17] Mathematica Policy Research, Inc., Doors to Extra Help: Boosting 
Enrollment in the Medicare Part D Low-Income Subsidy, #2007-15 (AARP, 
Washington, D.C.: September 2007). 

[18] CMS, Office of External Affairs, Strategic Research & Campaign 
Management Group, Division of Research, Formative Research on the Low 
Income Not Enrolled Population (no date). 

[19] GAO, Social Security Administration Field Offices: Reduced 
Workforce Faces Challenges as Baby Boomers Retire, GAO-08-737T 
(Washington, D.C.: May 8, 2008).

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