All Medicare beneficiaries entitled to benefits under Medicare Part A or enrolled in Part B are eligible to enroll in Medicare Part D. Medicare beneficiaries who qualify for full coverage under their state’s Medicaid program, as well as Medicare beneficiaries who qualify for more limited Medicaid coverage, Supplemental Security Income (SSI), or state Medicare Savings Programs are automatically enrolled in a Part D prescription drug plan by CMS, automatically qualify for the full subsidy of their premium and deductible, and do not need to file an application. They are referred to as “deemed.” Other Medicare beneficiaries who do not automatically qualify for the subsidy (i.e., who are not deemed) must apply and meet the income and resource requirements. These beneficiaries generally qualify if they have incomes below 150 percent of the federal poverty level and have limited resources. Generally, in 2008, individuals qualify if they have an income up to $15,600 for an individual and $21,000 for a couple and if they have resources up to $11,990 for an individual or $23,970 for a couple. The amount of the subsidy for premiums, deductibles, copayments, and catastrophic coverage varies depending on income and resources. Individuals generally apply for the benefit directly through SSA, although they may also apply through their state Medicaid office. The agency that receives an application, whether SSA or a state Medicaid agency, is responsible for making initial subsidy determinations and deciding appeals and redeterminations. Those who apply through SSA may submit their subsidy application using SSA’s paper application or an Internet application form. Applicants may also have their information entered electronically by visiting an SSA field office or by calling SSA’s toll-free phone line. According to state Medicaid officials we spoke with, they encouraged beneficiaries to apply for the subsidy through SSA whenever possible. As of March 2007, only the Colorado and Kansas state Medicaid agencies had made Part D subsidy determinations. Under the MMA, the Congress provided SSA with a special $500 million appropriation from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund to assist SSA in implementing its Part D responsibilities for fiscal years 2004 and 2005, but later extended the appropriation to fiscal year 2006. Since January 2006, SSA officials told us that the agency has had to draw on its overall administrative appropriation to support its Part D activities. SSA informed us that the agency now has a mechanism to track costs for low-income subsidy applications, and estimates that it cost the agency $175 million to administer the subsidy in fiscal year 2007, and that it expects similar costs in fiscal year 2008. SSA continues to approve low-income subsidy applications; of the applicants who were denied benefits, most exceeded income limits and others exceeded resource limits. To monitor its progress in implementing and administering the subsidy benefit, SSA has collected key data and established some goals. Of the approximately 7.2 million applicants filing for the subsidy as of March 2008, SSA approved 2.8 million. SSA received 1.3 million new applications in fiscal year 2007, approving approximately 570,000 (43 percent), denying approximately 403,000 (31 percent), and made no decision for approximately 281,000 (22 percent) because applicants had submitted duplicate applications among other reasons. According to a recent SSA study of individuals who applied for the subsidy in 2007 and where SSA made a decision by January 2008, SSA denied approximately 416,000 applicants. The most common reasons for denials were excessive income and resources. As Table 1 shows, excess income was the primary reason for denials, and excess resources were the reason in approximately 17 percent of the denials. For denials based on excess income, about 10 percent of applicants were within $500 of the income limit. About 98 percent of applicants with excess income received Social Security benefits, and 35 percent received pensions from sources other than veterans’ or Social Security benefits. Table 2 shows the extent to which applicants were denied subsidy eligibility because their income was too high. For those denied, the median excess income was $4,572. For denials based solely on excess resources, nearly 6 percent of applicants were within $500 of the resource limit. Table 3 shows the extent to which applicants were denied subsidy eligibility because their resources were too great. For those denied, the median excess resources were $13,690. Bank accounts and investments, which included stocks, bonds, and individual retirement account balances were responsible for about 57 percent of the excess resource denials. We reported, in May 2007, that SSA had established application processes for determining low-income subsidy eligibility, reviewing appeals, and conducting redeterminations; however, it had not established some key management tools to monitor progress of all of its efforts. To enable agencies to identify areas in need of improvement, GAO internal control standards state that agencies should establish and monitor performance measures and indicators. Accordingly, agencies should compare actual performance data against expected goals and analyze the differences. While SSA had tracked the progress of subsidy determinations since it began processing applications in July 2005, it did not have goals for measuring the processing time for these applications until March 2007. SSA’s goal is to process 75 percent of the subsidy applications in 60 days and reported that it processed 93 percent of determinations within 60 days during the first 6 months of fiscal year 2008. SSA had also been tracking the amount of time for resolving appeals of subsidy denials, but also did not have a performance goal to assess the timeliness of appeals decisions. In response to our recommendation, SSA established a goal of processing 75 percent of appeals within 60 days—similar to its goal for processing subsidy applications. SSA reported that 74.5 percent of appeals were processed in 60 days during the first 6 months of fiscal year 2008. SSA tracks various results from the redeterminations process, such as the number of decisions made, and the number and level of continued subsidies. According to the MMA and SSA regulations, all recipients of the subsidy are required to have their eligibility redetermined within one year after SSA first determines their eligibility. Future redeterminations are required to be conducted at intervals determined by the Commissioner. SSA’s regulations provide that these periodic redeterminations be based on the likelihood that an individual’s situation may change in a way that affects subsidy eligibility. Additionally, SSA’s regulations provide that unscheduled redeterminations may take place at any time for individuals who report a change in their circumstances, such as marriage or divorce. In May 2007, we recommended that SSA collect data on the processing time for individual redetermination decisions, and establish performance standards for such processing time. SSA disagreed with our recommendation, stating that the agency monitors the time for completing the overall redetermination cycle, providing adequate management controls. While SSA still does not collect processing time data for individual redetermination decisions, an SSA official recently told us that it is now the agency’s goal to complete redetermination decisions before the end of each year, except for people who do not respond to SSA’s inquiries. No reliable data are available to help SSA identify the eligible population for its outreach efforts, and millions who may be eligible have not yet applied, in part due to privacy concerns and application complexity. SSA is working with the Internal Revenue Service (IRS) to determine whether tax data can help target individuals eligible for the subsidy. According to available estimates, millions of individuals who may qualify for the subsidy have not yet applied. Various barriers, such as a reluctance to share personal financial information, may discourage some individuals from applying. Furthermore, SSA initially conducted a focused outreach campaign, but now incorporates such efforts into its overall Social Security outreach including work with third parties to publicize the subsidy and targeted outreach events on Mother’s Day and Father’s Day. SSA does not have access to data that might help it to narrowly target the eligible population. In the absence of reliable data for identifying the eligible population, in 2006 SSA broadly targeted 18.6 million individuals who might be eligible for the subsidy, which was an overestimate. SSA identified the target population by using income data from various government sources to screen out Medicare beneficiaries whose income made them ineligible for the Part D subsidy. SSA realized that using these data sources would result in an overestimate of the number of individuals who might qualify for the subsidy, because the data provided limited information on individuals’ resources or nonwage income. SSA officials said they took this approach to ensure that all Medicare beneficiaries who were potentially eligible for the subsidy were made aware of the benefit and had an opportunity to apply for it. SSA officials said that they would have preferred to specifically target Medicare beneficiaries who were more likely to be eligible for the subsidy by using tax data from IRS on individuals’ wage, interest, and pension income. Current law permits SSA to obtain income and asset data from IRS to assist in verifying information provided on subsidy applications. The law, however, prohibits IRS from sharing such data with SSA in the absence of a submitted application. According to SSA officials, such data would allow SSA to identify individuals to target outreach more directly and to estimate how many individuals may qualify for the subsidy. However, IRS officials told us that its data have many limitations that could affect their usefulness. For example, IRS officials said that they have limited data on assets for individuals whose income is less than $20,000 because these individuals do not typically have interest income, private pensions, or dividend income from stocks that could help SSA in estimating an individual’s potential asset level. Given these limitation, IRS officials stated that their tax data was more likely to identify individuals who would not quality for the subsidy, rather than those who would.