Taking a Bite out of the Donut Hole
For all the Medicare beneficiaries who find themselves drowning in Medicare’s prescription drug coverage Part D donut hole, the Bipartisan Budget Act of 2018 is throwing you a break. The Act accelerates closing the donut hole gap and offers prescription cost relief in 2019.
Currently, beneficiaries who have reached the $3,750 reimbursement threshold fall into the Part D coverage gap. Meaning, they’re required to pay $5,000 for prescribed drugs out of their own pocket.
When the $5,000 threshold is met, they exit the donut hole and catastrophic coverage kicks in. At that point, 95% of drug costs are covered for the remainder of the year. This is good news for Medicare beneficiaries who pay high out of pocket costs for their brand name medications.
Closing the Medicare Part D Donut Hole in 2019
Since the Affordable Care Act was passed in 2010, the donut hole has been slowly closing. By 2020, beneficiaries were expected to only pay 25% of their brand name drug costs while in the donut hole.
Now, enrollees won’t have to wait until 2020. Instead, the gap is closing beginning of 2019. Beneficiaries no longer have to choose between expensive medications that work vs medications that cost less, but aren’t as beneficial.
How the Donut Hole Coverage Gap Works
Medicare beneficiaries are reimbursed up to $3,750 for their prescriptions medications. Once a beneficiary exceeds $3,750 in covered drug expenses, they “fall” into the donut hole coverage gap. Beneficiaries become responsible for paying up to $5,000 for their prescription drugs.
This includes any premiums, deductibles and coinsurance costs. After $5,000 is paid out of pocket, the beneficiary reaches a threshold referred to as catastrophic coverage. While in the catastrophic coverage phase, prescription drugs are covered at 95% for the remainder of the year.
Cost for Generic and Brand Name Medications while in the Donut Hole
To clarify, the “donut hole” still exists, but pharmaceutical companies will now be required to pick up more of the tab. Thus, resulting in lower out of pocket expenses and closing the gap faster. The Bipartisan Budget Act of 2018 requires pharmaceutical companies to offer the same discounts to Medicare beneficiaries as they offer insurance providers and pharmacies.
Currently in 2018, once beneficiaries reach the donut hole, they’re responsible for 44% of the cost of generic drugs and 35% of brand name drugs.
Changes to the 2019 Medicare Part D Donut Hole
- Brand name drugs will be covered at 75%, reducing your shared cost to 25%.
- Generic drugs will be covered at 63%, reducing your shared costs to 37%.
- Standard initial deductibles will increase from $405 to $415 a month.
- Your initial coverage limit will increase from $3,750 to $3,820.
- The donut hole TrOOP will increase to $5,100 from $5,000. However you are paying less money out of pocket to reach the $5,100.
- After you reach the the $5,100, you’re eligible for catastrophic coverage. At that point both your generic and brand drug purchases will be covered at 95%.
Additional Information to Know
- Beneficiaries enrolled in the Extra Help program are not eligible for these discounts.
- Medicare sends a monthly Explanation of Benefits (EOB) that will indicate how much has been spent on generic and brand prescription drugs.
Compare Medicare Prescription Drug Plan Options
Private insurance companies have their own rates that vary according to the plan selected. Understanding all the changes is difficult, talking to someone who knows the industry can help guide you.
Get peace of mind knowing you chose the right Medicare Part D Prescription Drug Plan. Talk to one of our licensed agents today! Or you can compare 2019 Medicare Drug Plan rates online here!