For many older adults and people with limited incomes, prescription drug costs can take up a large part of their monthly budget. Programs that offer low-cost or even $0 prescription copays have long been essential for Medicare beneficiaries. However, with the end of Medicare’s Value-Based Insurance Design (VBID) model in 2025, many people are wondering how their drug costs may change.
How the End of VBID Impacts Medicare Prescription Drug Coverage
Beginning in 2026, the Centers for Medicare & Medicaid Services (CMS) will officially discontinue the VBID model. VBID allowed Medicare plans to offer enhanced, income-sensitive benefits — such as reduced or $0 prescription drug copays — to help those with financial limitations.
With VBID ending, many Medicare Advantage plans may no longer be able to offer widespread $0 drug copays or certain supplemental benefits tied to income. Some members could see higher out-of-pocket costs unless they qualify for another assistance program.
The good news: Medicare still offers a strong alternative for people with limited income and resources — the Medicare Part D Low-Income Subsidy, also known as Extra Help.
What Is the Medicare Part D Low-Income Subsidy (Extra Help)?
Extra Help is a federal program administered by the Social Security Administration. It is designed to help eligible Medicare beneficiaries pay for their prescription drug coverage and medication costs.
This program can significantly lower expenses for people on Medicare Part D or Medicare Advantage plans with drug coverage — especially those who previously benefitted from VBID.
What Savings Does Extra Help Provide?
If you qualify for Extra Help, you may receive:
Low or $0 monthly premiums for Part D coverage
$0 annual deductible for Part D
Lower copays for medications, including:
Up to $4.90 for generic drugs
Up to $12.15 for brand-name drugs
No Part D late-enrollment penalty, even if you did not sign up when first eligible
(Note: This does not remove any late-enrollment penalty for Medicare Part B.)
These savings can make a major difference for individuals who rely on multiple medications.
Who Qualifies for Extra Help?
Extra Help is reserved for Medicare beneficiaries with lower incomes and limited resources. To be eligible, you must:
Be enrolled in Medicare Part D or a Medicare Advantage plan with drug coverage, and
Meet income and resource limits set by Social Security.
Income Limits for 2025
Your annual income must be:
Less than $23,475 if you are single
Less than $31,725 for married couples living together
Income limits may be higher if you:
Live in Alaska or Hawaii
Still work and receive earned income
Support family members living in your home
Income That Does Not Count Toward Eligibility
Some forms of assistance do not count toward income, including:
SNAP (food stamps)
Housing assistance
Energy assistance
Medical bills or prescription costs
Disaster relief
Earned Income Tax Credit payments
Help from others with household expenses
Victim compensation
Scholarships or education grants
Extra Help Resource Limits
To qualify, your available “resources” must also fall within certain limits:
$17,600 for an individual
$35,130 for a married couple living together
Resources that count:
Real estate other than your primary home
Bank and retirement accounts
Stocks, bonds, and mutual funds
Cash
Resources that do not count:
Your primary residence
Personal belongings such as jewelry or furniture
All vehicles
Life insurance policies
American Indians and Alaska Natives may have additional exclusions.
Who Automatically Qualifies for Extra Help?
Some Medicare beneficiaries are automatically enrolled in Extra Help, including:
Individuals with full Medicaid coverage
People receiving Supplemental Security Income (SSI)
Those whose Part B premiums are covered by Medicaid
Individuals eligible for both Medicare and Medicaid (D-SNP members)