TO:

State and Tribal Agencies Administering the Temporary Assistance for Needy Families Program and Other Interested Parties.

SUBJECT:

Disregard of Transitional Drug Subsidies under the Medicare Prescription Drug, Improvement, and Modernization Act.

PURPOSE:

To inform State and Tribal agencies of a new statutory disregard of drug discounts and transitional assistance available to certain Medicare beneficiaries.

REFERENCES:

 Section 1860D-31(g)(6) of the Social Security Act

BACKGROUND

The President signed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) on December 8, 2003. The new law will offer Medicare beneficiaries access to subsidized drug coverage beginning in 2006 and makes other improvements to the program. One provision of the MMA implements a temporary, Medicare-endorsed drug-discount card program through which beneficiaries pool their purchasing power to secure discounts on their medicines. Effective on June 1^st, Medicare beneficiaries at or below 135 percent of the federal poverty level (FPL) can also qualify for $600 in transitional assistance for the remainder of 2004 and another $600 in 2005.   

POLICY:

Section 1860D-31(g)(6) of the Social Security Act clarifies the interaction between the drug discount card/transitional assistance and other Federal assistance programs:

“The availability of negotiated prices or transitional assistance under this Section shall not be treated as benefits or otherwise taken into account in determining an individual’s eligibility for, or the amount of benefits under, any other Federal program.”

Under this provision, neither the discounts nor the subsidy should be counted as income or otherwise taken into account either in determining whether an individual is eligible for assistance or in determining the amount of such assistance. As such, this disregard should be applied in all cases where the drug discount card/transitional assistance might affect TANF eligibility or benefit amounts.

INQUIRIES:

Inquiries should be directed to the appropriate Administration for Children and Families (ACF) Regional Administrator.

                   /s/
______________________
Andrew Bush
Director
Office of Family Assistance