For Medicare beneficiaries who find themselves falling into the Medicare Part D donut hole, the Bipartisan Budget Act of 2018 is here to help. The donut hole is the Part D coverage gap.
Before 2006, beneficiaries didn’t have coverage during the donut hole. So, beneficiaries would pay 100% of brand-name drug expenses during the gap.
This became expensive for many seniors, and because of the Affordable Care Act as well as the Bipartisan Budget Act, the donut hole will end.
In 2019, the donut hole will mostly affect those taking generic prescriptions.
Those taking brand-name drugs will be covered at 75% during the donut hole. Beneficiaries taking generics will be covered at 63% during the coverage gap.
Say Goodbye to the Donut Hole
Currently, Medicare beneficiaries with prescription costs reaching $3,820 will fall into the Part D coverage gap. The $3,820 amount is the retail cost of the prescription, not what the beneficiary has paid toward the costs.
So, you may have only paid $1,000 out-of-pocket on drugs. However, if the total expense is $3,820, then you’ll reach the donut hole in 2019.
Beneficiaries are required to pay $5,100 for prescribed drugs out of their own pocket to reach the catastrophic coverage phase.
Unlike the $3,820 to fall into the gap, the $5,100 represents the amount the Medicare beneficiary has spent out of their own pocket.
Once you meet the $5,100 in out of pocket expenses, catastrophic coverage begins. At that point, 95% of drug costs are covered for the remainder of the year. This is great 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
The donut hole is slowly closing since the Affordable Care Act passing in 2010. By 2020, beneficiaries are expecting to pay 25% of their brand name drug costs while in the donut hole.
In 2019, the coverage gap is closing significantly. Beneficiaries have gone from covering 100% of their prescriptions in the donut hole to around 25 percent of the cost of brand name drugs.
Beneficiaries will 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 pay their deductible if applicable, and their copays until the costs reach $3,820 for their prescriptions medications.
Once a beneficiaries drug cost exceeds $ 3,820, they “fall” into the donut hole. Beneficiaries become responsible for paying the next $5,100 for their prescription drugs.
After paying $5,100 out of pocket, the beneficiary reaches the catastrophic coverage phase.
While in the catastrophic coverage phase, Medicare beneficiaries pay 5% of the cost of their prescription drugs 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. However, the government is requiring pharmaceutical companies to cover more. Thus, resulting in lower out of pocket expenses and closing the gap faster.
Brand name drugs weren’t supposed to be covered at 75% until 2020. Then the Affordable Care Act and the Bipartisan Budget Act saved beneficiaries. Now you’ll have more coverage during the donut hole than ever before.
The Bipartisan Budget Act of 2018 requires pharmaceutical companies to offer the same discounts to Medicare beneficiaries as they offer insurance providers and pharmacies.
Changes to the 2019 Medicare Part D Donut Hole
In exchange for the coverage gap closing, there are some other cost increases from 2018 to 2019.
The amount needed to reach the coverage gap increased from $$3,750 to $3,820. Additionally, the amount needed to reach catastrophic coverage increased from $5,000 to $5,100.
In addition to these increases, standard initial deductibles increased from $405 to $415 a month.
These aren’t huge amounts and the coverage increases you get are these:
- Brand name drugs will be covered at 75%, reducing your shared cost to 25%
- Generic drugs will be covered at 63%
Additional Information to Know About the 2019 Medicare Part D Donut Hole
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. It’s your responsibility to review and understand these benefits.
Compare Medicare Prescription Drug Plan Options
Having Part D coverage as soon as your eligible for Medicare will ensure you don’t incur a Part D late enrollment penalty. There are many gap insurance plan options and carriers to choose from, like Aetna and Mutual of Omaha.
To compare prescription drug plans, you can use this Part D plan finder. You can also speak with one of our licensed insurance agents about coverage options by calling the phone number above.