How to Access Free Part D Plans for Low Income Subsidy Enrollees

March 23, 2026

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Introduction

Every year, hundreds of thousands of Medicare enrollees with the Low-Income Subsidy (LIS or “Extra Help”) overpay for Medicare prescription drug coverage. In plan year 2025, for example, 600,000 LIS enrollees were enrolled in a standalone prescription drug plan that charged them a premium, even though they were eligible for a free Part D plan.^[1] In many cases, the reason that individuals pay premiums is inertia. Advocates can help their clients by helping them switch to a premium-free Part D plan and save money so they can better meet their basic needs.

Background

People who qualify for LIS do not pay prescription drug premiums if they enroll in plans with “benchmark” premiums. Benchmark plans have premiums at or below a cut-off in each region, which is set yearly by the Centers for Medicare and Medicaid Services (CMS). LIS recipients who are enrolled in a Prescription Drug Plan (PDP) or Medicare Advantage plan (MA-PD) with Part D premiums above the CMS cut-off must pay the difference between the benchmark premium and the premium charged by the plan (Note that MA-PDs can use rebates to lower or eliminate Part D premiums.).

Sometimes PDPs lose benchmark status. For LIS recipients who were auto-enrolled in a benchmark plan by CMS, CMS will also automatically move them to a different plan if their current PDP loses benchmark status the following year. However, LIS recipients who pick a plan at any point in their Medicare eligibility (called “choosers”) are not moved automatically if their plan’s costs are above the benchmark in any subsequent year. If these LIS recipients do not affirmatively choose a new benchmark plan, they will have to pay the difference between the benchmark premium and the premium charged by their current PDP.

Choosers receive a notice in early November on tan paper (the “tan” or “choosers notice”) informing them of their new premium and offering them a list of plans available with no premium liability. The tan notice goes to any chooser who will pay a premium for the first time or whose premium will go up. Choosers do not receive the tan notice if they already are paying a premium and that premium stays the same or goes down.

What Advocates Can Do to Help Clients

Familiarize yourself with the tan choosers notice so you can help your clients understand their options.
Ask all your LIS clients whether they are paying a premium. If they are or don’t know, urge them to review their options with a State Health Insurance Assistance Program (SHIP) counselor. Assistance is also available through 1-800-Medicare or on Medicare Plan Finder on the Medicare.gov website.
If at any time during the year, you learn that an LIS client is paying Part D premiums, urge that client to review all plan options and consider changing plans. The best time to review coverage options is during the Open Enrollment Period from October 15 through December 7. Remember, however, that LIS enrollees can change standalone prescription drug plans on a monthly basis, and there are also times when individuals in an MA-PD can change their coverage.^[2]

SCENARIO 1

Mrs. T has qualified for LIS since 2018. CMS originally assigned her to Beta Basic PDP, which didn’t require her to pay a premium. A few months later, she changed to Epsilon Extra PDP, with no premium for her and a better formulary for her prescription drug needs. For the 2025 plan year, the premium for Epsilon Extra increased and she was required to pay a $10 premium per month. She received a tan notice in November 2024, but she was ill at the time and did nothing. For the 2026 plan year, her premium will remain at $10. Because her premium is staying constant, she will not receive a tan notice in November 2025. At the urging of a local counselor, she consults with her local SHIP program. It appears that, given her prescription drug needs, at least one benchmark plan will work for her with no premium obligation.

SCENARIO 2

Mr. R has had LIS since 2013. His auto-assigned plan had worked well for him until 2021, but because of changed prescription drug needs, he decided with assistance from his local SHIP to move to Gamma Great PDP, which had a $5 premium above benchmark. He felt comfortable that he could afford the extra cost in return for a formulary that met his needs. Over the next few years, however, his plan’s premiums have risen, and he is now paying $40 per month for Gamma Great coverage. Every year he gets a tan notice and ignores it, but finally this year he brings it to the service coordinator in the senior housing where he lives. The coordinator helps him to set up an appointment with a SHIP counselor. With SHIP assistance, he decides to change to Alpha Allround PDP, which still is above benchmark but only by $4, and covers his drug needs. He saves $36 in monthly premiums—money he can use to stretch his food budget and meet other needs through the end of each month.

Conclusion

If a person is enrolled in LIS, they should have an option to enroll in a zero premium Part D plan. If a client is on LIS and paying a Part D premium, offering them Part D plan options can be a way to help lower their monthly costs.