What Medicare LIS Is and Who It Helps
Medicare LIS (Low-Income Subsidy) is a federal program that pays part or all of your Medicare prescription drug costs if your income and savings fall below a certain level. The program covers the monthly premium for a drug plan, the yearly deductible, and a portion of what you pay when you fill prescriptions. You do not have to be on Medicaid to receive it — LIS is a separate program based only on your income and resources.
The program exists because Medicare Part D (prescription drug coverage) can cost hundreds of dollars per year in premiums and out-of-pocket expenses. LIS removes that barrier for people whose income is between 135% and 150% of the federal poverty line, depending on which tier of help you fall into. In 2024, that means roughly $1,800 to $2,000 per month for a single person, though the exact threshold changes each year.
You do not need to be retired, disabled, or on any other benefit to use LIS. You only need to be enrolled in Medicare Part B and have income and savings within the limits. Many people discover they may have access to only when they try to sign up for a drug plan and see the subsidy option appear.
Key Takeaways
- Medicare LIS pays your drug plan premium, deductible, and a share of prescription costs if your income is roughly 135–150% of the federal poverty line.
- You must be enrolled in Medicare Part B and have savings below roughly $8,000 (single) or $16,000 (married) to be considered.
- Social Security will check your income and savings automatically each year and tell you if you still may have access to; you do not have to reapply unless your situation changes.
- If you lose LIS because your income rose, you have a special window to switch drug plans without penalty.
- The program has three cost-sharing tiers; your tier depends on your exact income level, and it determines how much you pay per prescription.
Income and Savings Limits for LIS
LIS has two separate thresholds: one for income and one for savings (called "resources"). You must fall below both to receive help. The income limit is expressed as a percentage of the federal poverty line, which changes each year. In 2024, the limit is 150% of poverty for the highest tier of LIS help, which works out to roughly $2,000 per month for a single person or $2,700 for a married couple. However, some people with slightly higher income may still receive partial help at the 135% level.
Your savings and investments cannot exceed roughly $8,000 if you are single or $16,000 if you are married. This includes bank accounts, stocks, bonds, and CDs, but not your home, car, or life insurance. If you are close to the limit, moving money into a burial fund (up to $1,500 per person) or a prepaid funeral plan can reduce your countable resources without affecting your LIS status.
Social Security uses your tax return from two years prior to estimate your current income. If your actual income is lower, you can report that to Social Security and they will recalculate. If your income has risen above the limit, you will lose LIS, but you will have a chance to switch drug plans during a special enrollment period without the usual late-enrollment penalty.
How to Report Your Income and get your free guide
Social Security automatically checks your income each year using IRS records. If you appear to may have access to, they will send you a notice in the mail saying you have been found presumptively may be able to access for LIS. You do not have to do anything at that point — you can straightforward choose a drug plan and the subsidy will be applied when you enroll.
If you do not receive a notice but believe you may have access to, you can contact Social Security directly at 1-800-772-1213 (TTY 1-800-325-0778) and ask them to check your income. Have your most recent tax return handy. You can also visit your local Social Security office in person. The process is free and takes a few minutes.
Once Social Security confirms your may be able to access, you choose a Medicare Part D drug plan as usual. When you enroll, the plan will automatically explore your LIS subsidy to the premium. You will receive a notice showing your cost-sharing tier and what you will pay for each prescription. Keep this notice — you will need it when you fill prescriptions at the pharmacy.
The Three Cost-Sharing Tiers and What You Pay
LIS divides people into three groups based on income. Each tier determines how much you pay for prescriptions. The exact dollar amounts change each year, but the structure stays the same.
| Tier | Income Range (2024) | What You Pay Per Prescription |
|---|---|---|
| Tier 1 (Full Subsidy) | Up to 135% of poverty | $0–$5 copay per prescription |
| Tier 2 (Partial Subsidy) | 135–150% of poverty | 15% coinsurance (you pay 15% of the drug cost) |
| Tier 3 (Transitional) | 150–175% of poverty | Partial help with costs; varies by plan |
If you are in Tier 1, you pay a small copay (usually $1 to $5) for each prescription, and the program covers the rest. If you are in Tier 2, you pay 15% of the cost and LIS pays 85%. Your pharmacy will calculate this at the register. If you are in Tier 3, you receive some help but not as much; this tier is less common and applies only to people whose income is slightly above the main LIS cutoff.
The copay or coinsurance amount does not count toward your yearly out-of-pocket maximum, which means you will not reach the "catastrophic coverage" phase where Medicare covers 95% of costs. This is one reason why LIS is so valuable — it keeps your costs low throughout the year.
What Happens If Your Income Changes
Social Security reviews your LIS status once per year, usually in the fall. If your income has risen above the limit, they will send you a notice saying you no longer may have access to, effective January 1 of the following year. This does not mean you lose drug coverage — you stay on your current plan through December 31 — but starting January 1, you will pay the full premium and cost-sharing for that plan.
When you lose LIS, you have a special enrollment period lasting two months to switch to a different drug plan without the usual late-enrollment penalty. This is important because your current plan may be unaffordable without the subsidy. You can use this window to find a plan with a lower premium or to switch to a plan that covers your drugs more cheaply. Contact your current plan or Medicare directly at 1-800-MEDICARE to make the change.
If your income drops back below the limit later, you can report the change to Social Security at any time. They will restart your LIS as soon as they verify the new income. You do not have to wait for the annual review.
Common Mistakes and How to Avoid Them
One frequent error is not reporting a change in income promptly. If your income rises and you do not tell Social Security, they will eventually discover it through IRS records and will send you a bill for the subsidy you received while ineligible. Report changes within 30 days to avoid this. You can report by phone, mail, or in person at a Social Security office.
Another mistake is confusing LIS with other programs. LIS is separate from Medicaid, Medicare Savings Programs, and the Part D Low-Income Cost-Sharing Program (which helps people on Medicaid). You can receive LIS and a Medicare Savings Program at the same time, and doing so often saves you more money. Ask Social Security whether you may have access to for both.
Some people also assume they must choose a specific drug plan to use LIS. In fact, you can use LIS with any Medicare Part D plan that participates in the program — which is nearly all of them. Choose the plan that covers your drugs best, not the one you think will give you the subsidy. The subsidy applies automatically once you are found may be able to access.
Frequently Asked Questions
Do I have to be on Medicaid to get Medicare LIS?
No. LIS is a separate program based only on your income and savings. You can receive LIS without being on Medicaid, and you can receive both at the same time. Many people may have access to for LIS but not Medicaid because the income limits are different.
What if I live with family members — does their income count toward my LIS limit?
No. Only your own income and savings count, unless you are married. If you are married, Social Security counts both spouses' income and savings together, even if you file separate tax returns. If you are single and live with adult children or other relatives, their income does not affect your LIS status.
Can I use LIS with any drug plan, or do I have to choose a specific one?
You can use LIS with almost any Medicare Part D plan. The subsidy is not tied to a particular plan — it follows you. Choose the plan that covers your medications best and has the lowest premium. The LIS subsidy will explore automatically when you enroll.
What happens to my LIS if I move to a different state?
Your LIS status does not change when you move. Social Security will continue to pay your subsidy as long as you remain may be able to access. However, the drug plans available in your new state may be different, so you should review your plan options during the annual enrollment period to make sure your medications are still covered.
If I am in Tier 2 and pay 15% coinsurance, does that count toward my deductible?
No. When you are on LIS, you do not have a deductible in the traditional sense. You pay your cost-sharing (copay or coinsurance) from the first prescription onward. This cost-sharing does not count toward any out-of-pocket maximum, which is why LIS is so valuable for people who take multiple medications.