On January 1, 2018, the Medicare outpatient prescription drug benefit (Medicare Part D) began its 13 th year of operation. Congress created Part D in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173 ), effective January 1, 2006. The law also made Part D the primary source of drug coverage for individuals covered under both Medicare and Medicaid (so-called dual eligibles). Since that time, Part D has been modified by a series of statutes, including by the Patient Protection and Affordable Care Act of 2010 as amended (ACA; P.L. 111-148 ; P.L. 111-152 ). Part D coverage is provided through private insurance plans (PDPs) that offer only drug coverage, or through Medicare Advantage (MA) plans (MA-PDs) that offer drug coverage as part of a broader, Medicare Part C managed care benefit. Alternatively, beneficiaries may be enrolled in retiree prescription drug plans offered by their former employers. The MMA provides subsidies for retiree drug plans as an incentive to employers to continue such plans. (See " Retiree Drug Subsidy .") A growing number of employers and unions are also offering retirees (and their eligible spouses and dependents) Part D benefits through employer-group waiver plans (EGWPs). See " Employer Group Waiver Plans .") As of July 2018, 44.2 million Medicare beneficiaries were enrolled in Part D plans. Of that total, about 25.5 million were in PDPs, 18.0 million were in MA-PDs, and about 690,000 were in other types of plans. A major focus of the Part D program is providing subsidized coverage to qualified, low-income beneficiaries. Individuals with incomes up to 150% of the federal poverty level and limited assets are eligible for a low-income subsidy (LIS). The LIS reduces beneficiaries' out-of-pocket spending by paying for all, or some, of the Part D monthly premium and annual deductible, and limiting co-payments or coinsurance. The LIS is progressive, meaning the lowest-income beneficiaries receive the greatest assistance. An estimated 12.9 million beneficiaries will receive the LIS in 2018. The ACA made major changes to Part D in an effort to improve coverage and to make the premium structure more progressive, including requiring higher-income beneficiaries to pay more for coverage. Starting in 2011, the ACA required Part D enrollees with incomes above a certain threshold to pay a monthly surcharge in addition to their regular plan premiums. (See " Premium Surcharge for Higher-Income Enrollees .") In addition, the ACA phases out the "doughnut hole" by requiring drug manufacturers to provide discount for brand-name drugs purchased by beneficiaries in the Part D coverage gap, or "doughnut hole" and gradually phases in Medicare subsidies to cover 75% of the cost of generic drugs and 25% of the cost of brand name drugs in the coverage gap. (See " The Coverage Gap .") The ACA provisions were further modified by the Medicare Access and CHIP Reauthorization Act (MACRA; P.L. 114-10 ) and the Balanced Budget Act of 2018 (BBA 2018; P.L. 115-123 ), which, among other things, accelerated the closing of the coverage gap. Medicare Part D relies on participating private insurance plans to provide coverage and bear part of the financial risk of the program. All Part D plans must meet certain minimum requirements, though there are significant variations among plans in terms of benefit design including differences in premiums, drug formularies (i.e., lists of covered drugs), and cost sharing for particular drugs. In 2018, a total of 782 PDPs are offered nationwide, an increase of 36 (or 5%) from 2017 but a 12% reduction from 2016. Medicare beneficiaries have 23 PDPs and 17 MA-PDs to choose from in their geographic area, on average. In general, anyone who is entitled to Medicare Part A and/or enrolled in Part B is eligible to enroll in a Medicare Part D drug plan. In addition, an individual must be a U.S. citizen or qualified alien and must permanently reside within one of the 34 designated PDP regions in the United States; anyone who is living abroad or is incarcerated is not eligible. For most people, joining Part D is voluntary, although dual-eligible beneficiaries (see " Full-Subsidy-Eligible Individuals ") are automatically enrolled. Medicare beneficiaries cannot be turned down for Part D coverage due to preexisting health conditions or high utilization of prescription drugs. Of the 58.6 million Medicare beneficiaries in 2017 who were eligible for Part D, 42.5 million (72.5%) were enrolled in a Part D plan and another 1.6 million (2.7%) had prescription drug coverage through a former employer that received a Part D subsidy for a portion of their coverage. Of the remaining 25% of Medicare beneficiaries, about half had drug coverage as generous as Part D through another source, such as the Federal Employees Health Benefits program, TRICARE, or private coverage. The remaining 12.5% of Medicare beneficiaries either had less generous coverage than Part D or no drug coverage at all. (See Table 1 .) Beneficiaries with limited incomes and resources may qualify for assistance with their Part D premiums, cost sharing, and other out-of-pocket expenses. In 2018, a forecast 12.9 million Medicare beneficiaries received low-income subsidies (LIS). (See Table 2 below.) Certain groups of Medicare beneficiaries automatically qualify (and are deemed eligible ) for the full low-income subsidy. So-called full benefit dual eligibles who qualify for Medicaid based on income and assets are automatically deemed eligible for Medicare prescription drug low-income subsidies. Additionally, those who receive premium and/or cost-sharing assistance from Medicaid through the Medicare Savings Program (MSP), plus those eligible for Supplemental Security Income (SSI) cash assistance, are automatically deemed eligible for full low-income subsidies. This group includes all eligible persons who (1) have incomes below 135% of the federal poverty level, or $16,389 for an individual and $22,221 for a couple in 2018; and (2) have resources below $7,560 for an individual and $11,340 for a couple in 2018. The limits are increased annually by the percentage increase in the Consumer Price Index (CPI). (See Table 3 .) The Centers for Medicare & Medicaid Services (CMS) deems individuals automatically eligible for LIS effective as of the first day of the month that they attain qualifying status (e.g., become eligible for Medicaid or SSI). The end date is, at a minimum, through the end of the calendar year within which the individual becomes eligible. Beneficiaries who are deemed LIS-eligible for any month during the period of July through December of one year are deemed eligible through the end of the following calendar year. CMS changes an individual's deemed status in mid-year only when such a change qualifies the beneficiary for a reduced co-payment obligation. Eligibility for the LIS is not always continuous from year to year. For example, LIS beneficiaries who lose eligibility for Medicaid or SSI during the year are not automatically qualified to receive the LIS the next year. Each September, CMS is to notify such individuals that their LIS-deemed status will end on December 31 of that year. Such individuals may reapply for the LIS, as they may qualify for the LIS through the application process. (See " LIS Enrollment .") At the end of each plan year, CMS reassigns LIS beneficiaries who are enrolled in Part D plans if their plan is terminated or raises its monthly premium to a level above the LIS benchmark premium for the plan region. The ACA altered the method for determining which Part D plans are eligible to enroll low-income beneficiaries so that more plans can qualify and, thus, reduce the number of low-income beneficiaries who are reassigned from year to year. According to CMS, 279,419 LIS beneficiaries enrolled in PDP plans and 91,419 in MA-PDs were reassigned for the 2017 plan year. Other individuals with limited incomes and resources who do not automatically qualify may apply for the low-income subsidy and have their eligibility determined by either the Social Security Administration (SSA) or their state Medicaid agency. This group includes all other persons who (1) are enrolled in a PDP plan or MA-PD plan; (2) have incomes below 150% of the federal poverty level, $18,210 for an individual and $24,690 for a couple in 2018; and (3) have assets below $12,600 for an individual and $25,150 for a couple in 2018 (increased in future years by the percentage increase in the CPI). An individual who applies, and is deemed eligible for the LIS, is allowed to begin receiving benefits on the first day of the month in which the application was submitted. In most cases, this means that LIS status is applied retroactively. For example, if an LIS beneficiary was enrolled in a Part D plan prior to a determination of LIS eligibility, the Part D sponsor must ensure that the beneficiary is reimbursed for any premiums or cost sharing that should have been covered by the subsidy. If a person was not already eligible for Medicare, the LIS subsidy takes effect on the first day of the month when his or her Medicare eligibility begins. Initial LIS eligibility determinations are for no longer than 12 months. If the SSA or a state Medicaid agency later decides that an individual is no longer eligible for the LIS, that same entity also decides when the LIS benefits end.