WASHINGTON - Elderly people with low incomes may lose some of their food stamps if they sign up for the new Medicare prescription drug benefit, the Bush administration said Saturday.

When Medicare begins covering drugs in January, older Americans will spend less of their own money on drugs and will therefore have more to spend on food, reducing their need for food stamps, officials said.

The new reading of the Medicare law, set forth in a document sent to congressional offices last week, comes just as federal officials begin a nationwide campaign to persuade low-income people to apply for the drug benefit.

The document, addressed to elderly and disabled people who receive food stamps, says, "You may qualify for extra help paying for your Medicare prescription drug costs." But it adds, "If you qualify for extra help, your food stamp benefits may decline."

Mark McClellan, administrator of the Centers for Medicare and Medicaid Services, defended the policy. "Medicare beneficiaries will get comprehensive help with their drug costs and will have significantly more resources for all their other basic necessities, including food," he said. The savings on prescription drugs will more than offset any loss of food stamps, so "low- income seniors will be better off," he said.

In debate on the prescription drug bill in 2003, members of Congress said the high cost of drugs was forcing many older Americans to choose between food and medicine.

The document, prepared by the Health and Human Services Department, tells Medicare beneficiaries: "With the Medicare prescription drug coverage, you may see your food stamp benefits go down as you spend less on drugs. Using the new Medicare benefit means you will have more cash to spend on food that you used to spend on prescription drugs."

Subsidies will be available to an individual with monthly income of $1, 197 or less and a married couple with income of $1,604 or less.

The guide gives this example of how the new law would affect a hypothetical Medicare beneficiary: Mrs. Smith receives $798 a month in Social Security. She does not receive Medicaid. She now pays $147 a month for medical expenses, including $51 for three prescription drugs. Her monthly rent is $421.

Under the Medicare drug plan, Mrs. Smith will not have to pay a monthly premium or a deductible. She will have a $3 co-payment on each drug, for $9 a month. Her medical spending will decline to $105 a month, from $147, for a saving of $42.

But Mrs. Smith's monthly food stamp allotment, $27, will be reduced to $10 a month, because her "out-of-pocket medical costs have gone down." The administration says she will come out ahead because "she still has $25 more cash in her pocket -- $42 medical savings, less the $17 decrease in food stamps."

© Copyright 2005 New York Times Company

###