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Pharmacy Medicare and Medicaid Relationship

The Medicare prescription drug benefit provides drug coverage for Medicare beneficiaries, including those who also receive coverage from Medicaid. In addition, individuals eligible for both Medicare and Medicaid also receive the low-income subsidy for both the Medicare drug plan premium and assistance with cost sharing for prescriptions. Medicaid will no longer provide drug benefits for Medicare beneficiaries.

Since the Medicare drug benefit and low-income subsidy will replace a portion of State Medicaid expenditures for drugs, States will see a reduction in Medicaid expenditures. To offset this reduction, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173) requires each State to make a monthly payment to Medicare representing a percentage of the projected reduction. For 2006 this payment was 90 percent of the projected 2006 reduction in State spending. After 2006 the percentage decreases by 1/3 percent per year to 75 percent for 2014 and later.

For more information about Medicare and Medicaid please visit on the CMS web site. ure was prepared as a service to the public and is not intended to grant rights or impose obligations. This brochure may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.

2010 Medicare Part D and Medicaid Help

2009 Medicare Part D and Medicaid Help