CMS updates resource, cost-sharing limits for Low-Income Subsidy in 2025

Each year, the Centers for Medicare and Medicaid Services determine income and resource eligibility thresholds for the Low-Income Subsidy (LIS) program. LIS, or Extra Help, reduces the amount eligible Medicare beneficiaries spend on prescription drugs. The subsidy can pay for plan premiums and some or all of the cost-sharing responsibility that the beneficiary might have. Medicare beneficiaries can apply for the subsidy at their local Social Security office, or online.

It's important to define two key terms: income is exactly what you think it is -- liquid assets such as earned wages, and some other payments. Resources, though, have a broader definition. Generally, it's any asset that can be converted to cash within 20 days -- items like bank accounts, stocks, and bonds. Real estate beyond the beneficiary's primary residence will also count as a resource. See Medicare.gov for a more complete listing.

Resource limits increase in 2025

CMS ties adjustments in the resource limits to the performance of the Consumer Price Index (CPI) -- a common measure of how prices change over time. When the CPI increases, the resource limits increase. When CPI decreases, so too do the resource limits. That said, the law limits the maximum increase in limits to 2.4% per year -- and that's exactly what we'll see this year.

We should also point out that beneficiaries may notify the Social Security Administration that they intend to use some of their resources for burial expenses. After this notification, beneficiaries see a slight bump to their personal resource limits - $1,500 per individual. 

For a full summary of the changes, check out the table below:

Cost-sharing increases in 2025

CMS also calculates the maximum copayments that subsidy-eligible enrollees can be responsible for each year. For beneficiaries whose income is greater than 100% of the federal poverty level (FPL), the change in copay is related to the change in how much Medicare spends on Part D drugs per eligible beneficiary. For beneficiaries whose income is less than 100% of the FPL, their copays are updated by the annual change in CPI.

The good news is that eligible beneficiaries making less than 100% of the federal poverty level will pay no more than $4.80 per prescription drug fill in 2025. Those making more than 100% of FPL, but less than 150%, will pay no more than $12.15 per prescription fill. 

The chart below has a full breakdown:

Key takeaways for LIS-eligible Medicare beneficiaries

The good news: Resource limits have increased. The bad news: So has the price of everything else. Because the resource limits and copays are tied to the Consumer Price Index, these numbers will move in lockstep with most things you purchase on a regular basis. The overall result, generally speaking, should be a wash. However, if changes in income don't keep up with changes in CPI, for example, if the Cost-of-Living-Adjustment from Supplemental Security Income doesn't keep pace, eligible beneficiaries may find themselves with less spending power overall. Therefore, it's critical to stay informed about all these numbers each year. By doing so, beneficiaries will be better equipped to budget for the year ahead.