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Medicare Part D – Doughnut Hole

What is the Medicare Doughnut Hole?

Many, if not most Medicare Prescription Drug Plans will have a coverage gap – also called the doughnut hole. This means there is a temporary limit on what the Medicare drug plan will cover for drugs.

Many will, but not everybody will enter the doughnut hole coverage gap. The gap begins after you and your drug plan have spent a certain amount for covered drugs. In 2013, once you and your plan have spent $2,970 on covered drugs (the combined amount plus your deductible), you’re in the coverage gap. This amount will probably change each year. People with Medicare coverage who get Extra Help paying Part D costs will not enter the coverage gap.

Once you reach the coverage gap in 2014, you will pay 47.5% of the plan’s expenses for covered brand name prescription drugs. You only get these savings if you buy your prescriptions at a pharmacy or order them through the mail. The discount will come off of the price that your plans has set with the pharmacy for that specific drug.

Although you will pay only 47.5% of the cost for the brand-name drug, the entire price – including the discount the drug company pays – will count as out-of-pocket costs which will help you get out of the coverage gap.

Needless to say – for most people with Medicare Part D, the doughnut hole presents serious financial challenges. Some people have had to choose between their rent or groceries and their prescription drugs.

The Affordable Care Act (2014) has some important changes that will help to relieve this burden for the people with Medicare that hit the doughnut hole each year.

Health Insurance Marketplace

You are hearing a lot about the Health Insurance Marketplace. That’s because the Marketplace Open Enrollment period overlaps with the Medicare Open Enrollment period. The Marketplace is designed to help people who do not have any health coverage. If you have health coverage through Medicare, the Marketplace won’t have any effect on your Medicare coverage.

If you already have Medicare, you are not affected by the Marketplace, but you still get to enjoy extra benefits thanks to the Affordable Care Act like these:

  • A discount of more than 50% on covered brand-name drugs if you hit the Part D prescription drug coverage gap (“donut hole”)
  • A host of preventive tests and screenings — including cancer screenings —  most at no cost to you

What is the Doughnut Hole?

The doughnut hole refers to a gap in prescription drug coverage under Medicare Part D. In 2013, once you reach $2,970 in prescription drug costs (which include both your share of covered drugs and the amount paid by your insurance,) you will be in the coverage gap. In 2013, you will get a 50 percent discount on brand-name drugs and a 14 percent discount on generic prescription drugs while you are in the coverage gap. When your total out-of-pocket costs reach $4,750, you qualify for “catastrophic coverage.” At that point, you are responsible for only 5 percent of your prescription drug costs for the rest of the year.

 

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