The Social Security Administration yesterday began mailing letters to almost 19 million Medicare recipients with low incomes who may qualify for subsidies under the new prescription drug benefit that begins in January.

The letters mark the beginning of what is likely to be a confusing summer and fall for many Medicare recipients.

Beneficiaries must decide whether the benefit is worth the cost and, if so, which plan best fits their needs. And the application forms for the subsidies, unlike those for an earlier drug discount program, can be daunting to fill out.

"It's very complicated," said Georgina Franci, 77, a retired district justice from North Versailles, who attended a briefing on the drug benefits this month. "I think people are going to have a terrible time understanding it."

The letters that began going out yesterday do not ask people to sign up for the benefit, but to submit an application to determine if they qualify for subsidies under the plan.

Without the subsidy, "the program is not cheap," said Fran Chervenak, managing attorney for the Pittsburgh office of the Pennsylvania Health Law Project. She and other consumer advocates are urging people who receive the subsidy applications not to discard them and to seek help in completing them if needed.

The letters, together with forms to apply for the subsidies, will continue to be sent through mid-August. Because they are routed by Social Security number, not by location, people in the same household may receive them at different times.

Beginning in July, applicants will start receiving notices about whether they have qualified for a subsidy, said Mark Lassiter, a Social Security spokesman.

People who don't receive an application and think they might qualify can obtain one from their local Social Security office or county public assistance office.

While Social Security continues to send out the subsidy applications, still other low-income people are getting letters telling them they will automatically receive the subsidies and don't need to apply.

A week ago, the federal Centers for Medicare and Medicaid Services, which administers Medicare, began sending out those letters to 20 million Supplemental Security Income recipients, to people who receive help from the government in paying their Medicare premiums and to people who receive both Medicare and Medicaid, so-called "dual eligibles."

Those recipients automatically will receive subsidies to participate in the new program.

Yet another letter is going out to participants in the state's prescription drug assistance program, known as PACE, encouraging them to apply for the federal subsidies if they receive an application in the mail.

PACE could save significant amounts of money if its eligible members apply for the federal subsidies and enroll in the new drug program, said Tom Snedden, program director.

He estimated that the new benefit could cover 80 to 90 percent of a PACE recipient's drug costs.

About 80,000 of the 300,000 PACE enrollees are expected to receive the federal subsidies, Snedden said, for an estimated savings of $180 million to the PACE program next year.

PACE already has saved millions of dollars by automatically enrolling its members in a federal discount drug card program that gives people as much as $600 a year toward their drug purchases, he added.

Federal officials have not approved a similar enrollment option for the new subsidy program, so PACE members, like many other low-income people, must apply for the subsidies on their own.

And doing so is not all that simple.

The five-page application for the subsidy asks for information that many may not readily know, such as the value of any stocks, bonds or other investments and the cash value of life insurance policies.

Peter Ashkenaz, a spokesman for the Centers for Medicare and Medicaid Services, said the questions are "the most basic we and Social Security can use to help make sure people are eligible for the extra help."

Experience with the Medicare discount card, which had a simpler application, suggests that many people might not sign up. Nationally, about one in four low-income people eligible for the $600 credit from the discount card actually received it, said Tricia Neuman, a vice president for the Kaiser Family Foundation.

Social Security's Lassiter said a variety of grass-roots efforts will help people apply for the new subsidy, including assistance provided at senior centers and churches.

Help in completing the application is available by calling Social Security at 1-800-772-1213. Information also is available by calling 1-800-MEDICARE.

Assistance also is available from APPRISE, the state's free health insurance information program, at 800-783-7067 or, in Allegheny County, 412-734-9330; the Pennsylvania Health Law Project, 1-800-274-3258; or the Consumer Health Coalition, 412-456-1877, Ext. 202.

Applying for the subsidy is only one step in obtaining the new drug benefit.

Whether they receive a subsidy or not, most Medicare recipients interested in the new prescription drug program have to apply for it beginning Nov. 15 by choosing a managed care health plan or a prescription drug plan that will provide the coverage.

Not all plans will provide coverage of all drugs.

A particular concern are people with mental problems who may be especially sensitive to changes in anti-psychotic medication, Neuman said.

Details about the new drug plans won't be available until later this year. Neuman said Medicare and other agencies will provide information and the plans likely will advertise their benefits as well.

A larger question for some recipients is whether they should even apply for the new drug benefit.

PACE recipients who do not receive subsidies probably should not apply for the federal program, said Ray Landis, advocacy representative for AARP Pennsylvania. Retirees who have good coverage from their former employers also may not want to join.

But the many Medicare recipients who lack good drug coverage and do not qualify for subsidies will have to consider whether the new prescription benefit is worth the cost.

Federal officials expect more than 29 million of the estimated 43.1 million elderly and disabled people who receive Medicare to enroll in the new prescription drug program.

"Some people will be better off under this coverage; some people won't be," the Pennsylvania Health Law Project's Chervenak said as she outlined details of the program during a presentation this month at Beverly Healthcare in Oakmont.

The new program is "even complex to explain, never mind to try to figure out if you're a consumer," she said.

She said enrollees who don't receive subsidies must pay a monthly premium of about $35, then meet an annual $250 deductible.

Once the deductible is met, they must pay a 25 percent co-pay for medications until they've incurred another $500 of out-of-pocket costs.

"At that point, they fall into what's called the doughnut hole," Chervenak said, "where they have to pay for all their medications out of pocket until they incur another $2,850 in costs."

Enrollees getting to that point would have $3,600 in out-of-pocket costs. But after that, they would be responsible for only small co-pays for the rest of the year.

People with full subsidies, by contrast, have no monthly premium or deductible and do not have to meet the doughnut hole requirement, Chervenak said, though they do have to make small co-pays.

Single people with income of less than $1,077 a month and assets of less than $6,000 may qualify for a full subsidy, she said, as well as married couples with monthly incomes of less than $1,443 and assets of less than $9,000.

A home and vehicles do not count as assets, though other property and the value of life insurance, stocks or bonds is countable.

To qualify for a partial subsidy, she said, single people have to have monthly incomes of less than $1,197 and assets of less than $10,000, and married couples monthly incomes of less than $1,604 and assets under $20,000. Unlike people with full subsidies, they have to pay a monthly premium based on income, a $50 annual deductible and a 15 percent co-insurance for many of their prescription drugs.

The process of meeting premiums and deductibles repeats each year, with costs to enrollees rising over time. By 2010, the average monthly premium for people without subsidies will be about $47.10 and the annual deductible $345, according to the Congressional Budget Office.

Still, Medicare recipients may regret not applying for the coverage. Penalties may be imposed on people who apply after the initial enrollment period, which extends from Nov. 15 to May 15.