07/14/2010 10:58 am ET | Updated Nov 17, 2011

Financial Help for Seniors

Senior citizens and others living on a fixed or low income know how difficult it is to make ends meet, especially when costs for essentials like health care, food and energy increase faster than their sources of income.

Here are a few cost-saving benefits available to people on fixed incomes -- especially seniors:

Prescription Drug Assistance Programs. Most pharmaceutical companies offer patient assistance programs (PAPs) that provide uninsured and low-income people access to prescription drugs they couldn't otherwise afford. Ask your doctor, pharmacist or health clinic for details. Other good resources include: Medicare's alphabetical list of drugs available through PAPs, with links to detailed eligibility information; Partnership for Prescription Assistance; RxAssist; and NeedyMeds.

Other money-saving ideas for medical expenses include: Health Care Reform. The health care reform bill signed into law by President Obama and Congress in March contains many provisions aimed at easing health care costs for seniors and low-income families. Many of these provisions will take several years before being fully implemented. For example, the bill calls for the coverage gap in Medicare prescription drug coverage to be eliminated. (This gap, the so-called "doughnut hole" is where you generally are responsible for all drug costs between $2,380 and $6,440, after which catastrophic coverage kicks in and you pay only 5 percent.) But prior to that, several steps will gradually lessen the financial impact of prescription drug costs. For example:
  • People who reach the coverage gap amount in prescription drug expenses will receive a $250 rebate in 2010 to lessen the financial burden.
  • In 2011, Medicare enrollees will get a 50 percent discount on the cost of brand-name drugs purchased in the coverage gap. This discount will gradually climb to 75 percent by 2020.
  • Generic drugs will also be discounted during the transition period, beginning with a 7 percent discount in 2011, gradually increasing to 75 percent by 2020.
  • In addition, the threshold needed to reach the point when catastrophic drug coverage kicks in will gradually decrease until it is eliminated in 2020.
Tax advantages. The IRS tax code includes several benefits that target seniors (and often, other lower-income taxpayers), including:
  • A higher standard deduction amount for most people who don't itemize deductions, if they and/or their spouse are over 65 or blind.
  • An additional tax credit called the Credit for the Elderly or the Disabled for lower-income people who are over 65 or disabled and file a 1040 or 1040A tax form. (For full details and eligibility, see IRS Publication 524.
  • Certain home improvements made to accommodate medical conditions or disabilities with a doctor's recommendation may be deducted if you itemize deductions. Rules are complex, so read IRS Publication 502 and consult a tax advisor before claiming such deductions.
  • Free tax return preparation assistance and counseling from IRS-trained volunteers is available to people over age 60, as well as low-to-moderate income folks and military families.

IRS Publication 554 is a comprehensive guide to help seniors prepare their tax returns. (Note: 2010 versions of many IRS publications have not yet been released, but the 2009 versions posted provide good background.)

Government programs. Many government-sponsored benefits, grants and financial aid programs exist to help seniors, low-income families and others pay their bills, including: LIHEAP, the Low-Income Home Energy Assistance Program, which provides grants to help pay utility bills. To see if you qualify, go to their website.
  • Also, check with your water, garbage collection, telephone and cable or satellite TV companies to see if they offer discounts for seniors, low-income families or the disabled. Rules vary, but you'll likely be asked to provide proof of age, income or disability status in order to qualify.
  • SNAP, the USDA's Supplemental Nutrition Assistance Program (formerly known as food stamps), helps millions of lower-income Americans buy nutritious food each month. Visit their website for qualification requirements.
  • Rental assistance for low-income families is available from several U.S. Department of Housing and Urban Development programs as well as other state and local agencies (visit this site for details).
  • Go to this site for a comprehensive overview of additional government aid programs.
  • And of course, don't forget to ask about senior discounts whenever you shop, travel or buy insurance -- 10 percent here and there can really add up. Always ask at the beginning of the transaction: Waiting until you settle the bill may be too late.

    One precaution: Senior rates at airlines, hotels, car rental agencies and other travel-related businesses are not always the cheapest available, so check their websites or ask a phone representative for the lowest available rate before booking the senior rate.

    This article is intended to provide general information and should not be considered tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how tax laws apply to you and about your individual financial situation.

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