Food Stamp Updates

October 1, 2004

Author: Barbara Weiner

Medicare Discount Drug Cards Carry Food Stamp Benefit

The new Medicare Discount Drug Cards are likely to have a positive effect on card holders who also participate in the food stamp program. The Food and Nutrition Service (FNS) of the United States Department of Agriculture has given states several options for the treatment of the prescription drug discount and subsidy provided through the card when calculating the food stamp grant of an individual who notifies the food stamp agency that he or she has the card.

The drug discount cards are the offspring of the rather complicated and dubious marriage between private drug companies and the Medicare program established in the Medicare Drug Improvement and Modernization Act of 2003. A large number of Medicare-approved private drug companies currently offer the discount card, which provides savings on brand name and generic drugs at retail pharmacies and through certain mail order programs. Medicare recipients must weigh the benefits between a bewildering array of Medicare approved drug cards from different companies providing varying discounts for particular drugs.

Recently Health and Human Services Secretary Tommy Thompson announced that the drug discount cards will automatically be sent to the nearly two million Medicare recipients whose income falls below 135% poverty. In addition to providing discounts on certain brands of drugs, these cards will also carry a subsidy of $600 a year for the next 2 years towards the purchase of the card holder’s prescriptions. The credit is included right on the card. All those who receive state help to pay Medicare premiums through what is known as the Medicare Savings Program are financially eligible and will automatically receive the discount cared carrying the subsidy. (Medicaid recipients are ineligible for the cards since they receive drug coverage through Medicaid).

Those who automatically receive the drug card from HHS will have a card chosen for them at random, which they can subsequently exchange for one from a different company which may be more useful to their particular needs.

Now for the food stamp benefit. Pursuant to provisions in the 2003 Medicare Act, the discounts and direct subsidy to low income Medicare recipients provided by the drug card are not to be counted as income in any other needs based benefit program, including food stamps. To provide food stamp recipients with the full measure of the card’s benefits, FNS has instructed the state agencies not only to exempt the subsidy and the value of the discounts from counting as income for food stamp purposes but to add the value of the subsidy and discount to the actual out of pocket expenses of the recipient for prescriptions in calculating the amount of the excess medical expense deduction to which the elderly or disabled recipient is entitled. FNS reasoned that to do otherwise would be to allow the benefits provided by the drug card to reduce food stamp benefits through the back door, by reducing the medical expense deduction which would otherwise be available to the recipient if he or she was paying for the full cost of their medications.

To save the states form having to perform the extremely complicated calculations that might otherwise go into determining by just how much the medical expense deduction should be increased for each card holder who is also a food stamp recipient, USDA has provided the states with several options. On October 4, 2004, the New York State Office of Temporary and Disability (OTDA) issued Administrative Directive 04-ADM-07, establishing the methodology to be used in New York. (The ADM is available at http://www.wnylc.net/pb/docs/04-adm-07.pdf.)

In New York, for the duration of the program (24 months) an additional $73 a month will be budgeted as a monthly medical expense over and above the Medicare card holder’s reported out of pocket medical expenses. The $73 figure was arrived at as follows: $23 is the estimated value of the discount card on a monthly basis and $50 is the 2 year, $1200 subsidy divided into monthly installments.

The one big drawback to all of this good news is that the local social services district must have notice that the food stamp recipient has the Medicare drug card before the recipient can reap the benefit of the increased medical expense deduction. Food stamp recipients with the drug card must tell the local districts that they have the card to ensure receiving the benefit of the increased deduction.

Unfortunately, nobody has told them that they must do this. Elderly and disabled food stamp recipients have received absolutely no notice, either from OTDA or HHS, that the Medicare drug card carries these additional food stamp benefits. Thus it is up to the communities serving the elderly and disabled to make them aware of this benefit, and as soon as possible.

Now is a particularly critical time. If the local district does not begin to deduct the $73 as a medical expense before January 1, 2005, a full 12 months of the benefit will be irretrievably lost. On the other hand, those who get the information to the social services district before January of 2005, will have the $73 added to the medical expense deduction for a full 24 months, well into 2006. If the information does not get to the local district until sometime next year, the card holder loses the 2004 benefit entirely and will only be eligible for a pro-rata benefit in 2005, depending on when he or she advises the local district about the drug card.

The Roll-Out of the New York State Nutrition Improvement Project (NYSNIP)

From June through December of this year, the Office of Temporary and Disability Assistance (OTDA) estimates that it will have automatically opened close to 100,000 new food stamp cases for SSI recipients who live alone and who are not currently participating in the food stamp program. This nearly doubles the number of single SSI households participating in the food stamp program. Under NYSNIP, a federally approved demonstration project, a food stamp account is established automatically for every SSI recipient who lives alone. The benefits are accessible through the SSI recipient’s Medicaid card.
The virtue of the program is that it does not require the individual to file an application and keeps to an absolute minimum the contact the recipient is required to have with the local district. The benefits provided are standardized and take four factors into consideration: cost of shelter, eligibility for the heating/cooling utility deduction, presence of other income and geographic location. In most of the cases, these standard benefits are as high or higher than the monthly food stamp benefit for which the SSI recipient would be eligible under the traditional budgeting process. In those few cases where the individualized budgeting process would be more beneficial (perhaps those with high monthly non-covered medical expenses), the recipient can ask to have his or her case removed from NYSNIP.

Phase 1 of the program’s implementation is complete. That involved the transfer over the past year of existing food stamp households that met the NYSNIP criteria into the new program. Phase 2 is the automatic opening of food stamp cases for single SSI recipients living in the community who are not currently receiving food stamps. The information available to OTDA for the opening of these cases is not detailed enough to permit the provision of the appropriate standardized benefit. Therefore, all current SSI recipients receiving notices that a food stamp account has been opened on their behalf will only be getting the minimum benefit available under the program: $20 a month for someone with SSI income only, $16 a month for SSI recipients who also get other income. However, as soon as the person provides information to the local district about their actual shelter and heating/cooling costs, their benefit will be adjusted and, in most cases will increase substantially.

Upon receiving notice from OTDA that a food stamp account has been established in their name, the SSI recipient must use some of the benefits within three months of receiving notice, otherwise the account will close. The automatic food stamp case opening is a one-time opportunity, If the person wants food stamp benefits at some time in the future, (s)he will have to apply at the local social services district office. Because OTDA is committed to bringing these elderly and disabled people into the food stamp program, a second notice will go out to households that haven’t used their benefits to remind them that they must do so, otherwise the account will close.

All advocates working with elderly or disabled SSI recipients living alone should encourage their clients to take advantage of the opportunity provided by NYSNIP.

Finger Imaging Exemptions - Opportunity for Expansion

A frequently cited barrier to participation in the food stamp program is the requirement that all adults in the household must be finger-imaged, contributing to the sense people have that to be poor is to be criminal. Many forego the benefits in order not to subject themselves to what they consider an indignity.

Although we are not likely to see the elimination of finger-imaging in general, for food stamp only applicants, OTDA is providing local districts with an opportunity to greatly expand the numbers of food stamp only applicants who can be exempted from the process.

In its notice to districts, Local Commissioner Memorandum 04-LCM-11, OTDA instructs districts, first, that food stamp program ineligible household members are not subject to finger imaging at all. This clarification should be especially reassuring for families in which some members are immigrants without legal status. Many local districts had been requiring the ineligible immigrant to submit to finger-imaging in order to process an application for the eligible citizen household members. Fear of immigration consequences frequently drove these families away from the food stamp program altogether.

Local districts all have “Automated Finger Imaging Systems” (AFIS) plans on file with OTDA. The Commissioner’s Letter allows the districts, and strongly encourages them, to amend their local plan to exempt certain groups from the finger-imaging requirement. The groups include:

• all those for whom an in-office interview is waived 
• household members ages 18 through 21 who are not a head of household or spouse 
• all those who are engaged in work or training during local district office hours 
• household members who are temporarily or permanently disabled or incapacitated 
• all elderly FS household members at or above 60 years of age 
• all those who must travel over an hour to the nearest AFIS site

Although many advocates had sought the complete elimination of finger-imaging in the food stamp program, this is an important and significant step towards that goal. We encourage advocates to engage with their local districts on this issue and to persuade the districts to take the opportunity offered by OTDA and exempt as many food stamp applicants as possible from finger-imaging.