Medicare Donut Hole
The Medicare Donut Hole is the coverage gap part of Part D. During this period; the beneficiary will have a temporary limit on their prescription drug coverage.
So, after spending a particular amount on a drug plan for prescription drugs, you’re responsible for costs out-of-pocket for drugs. Then you have responsibility for expenses up to a specific out-of-pocket limit.
Some of the things that count towards the out-of-pocket limit include co-payments, coinsurance, the yearly deductible, and what you pay during the coverage gap.
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.
The donut hole became expensive for many seniors. Because of the Affordable Care Act as well as the Bipartisan Budget Act, the donut hole will end.
Those taking brand-name drugs will have coverage at 75% during the donut hole. Beneficiaries getting generics will have coverage at 63% during the coverage gap.
Medicare Donut Hole Coverage Explanation
You’ll enter the coverage gap when you deductible, total drug costs, the insurers’ costs, and your co-pays reach $4,020. During the gap period, you must pay a certain percentage of the total cost of both brand-name and generic drugs.
Medicare Donut Hole coverage gets a certain percentage of the discounts on brand-name medicines by the drug manufacturers while the federal government pays the rest. Like most things on Medicare, 2019 changes to the donut hole are already in place.
Status of My Donut Hole Insurance Coverage Gap
The monthly statements you obtain from your plan provider should show you where you stand regarding your Medicare Donut Hole insurance coverage gap.
Knowing how much you mush spend on your medicines before you qualify for the catastrophic coverage is essential.
How the Donut Hole Coverage Gap Works
Medicare beneficiaries pay their deductible if applicable, and their copays until the costs reach $4,020 for prescription medications.
Once a beneficiaries drug cost exceeds $4,020, they “fall” into the donut hole. Beneficiaries become responsible for paying the next $6,350 for prescription drugs.
After paying $6,350 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.
How Can I Avoid the Medicare Donut Hole
If brand name drugs are a requirement for you, avoiding the donut hole could be near impossible. However, if you’re flexible in using generics drugs, prescription costs could be substantially lower.
You can prevent the coverage gap if:
- The cost of your drugs for the year does not go beyond a specific amount
- You have additional coverage from your employer or union benefits which covers part or all costs
- Medicare drug plan includes medicine while in the gap, usually for a higher premium. Prices for the additional coverage vary from plan to plan
Those that qualify for extra help, which is a low-income subsidy. The subsidy is a federal program that helps individuals with low-income pay for the Medicare Part D costs, like deductible, copayments/coinsurance, and premiums. You can apply for this program through the Medicaid department or the Social Security Administration.
If you qualify for this Help, you won’t enter the “gap.”
How Do I Get Out of the Donut Hole Gap
You’ll get out of the gap when out-of-pocket payments and anything you paid for medicines during the gap period reaches a certain amount.
Note that, the manufacturers’ contribution to the brand-name medicines counts towards your limit.
However, the amount contributed by the government does not make for the limit. Once you reach the limit, catastrophic drug coverage will kick in automatically, and your policy will settle 95 percent of the remaining costs until the year-end. This cycle repeats every calendar year.
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. drugs that cost less but aren’t as beneficial.
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 going to have coverage 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 provide insurance providers and pharmacies.
How Do I Get My Prescriptions During the Gap Period
You can purchase prescriptions at your pharmacy during the donut hole.
Your insurer will track your costs so that they can be able to count toward your out-of-pocket limit. You can also get your drugs elsewhere, which are less expensive than what your plan charges. Only medicines bought at pharmacies within the network of your plan contribute to the Medicare Donut Hole limits.
When you buy over the counter medicine, that doesn’t count towards your donut hole costs.
Donut Hole Prescription Assistance: Extra Help
Ask your doctor if any other medicine on your plan’s prescription would be as effective for your condition as the ones you’re currently using. Using lower-cost drugs, like generics or similar drugs, but older brand-names will substantially lower your costs.
It pays to have Donut Hole assistance like Extra Help or a state pharmacy assistance plan that can pay a portion or all your costs while in the gap. If you don’t have additional Medicare Donut Hole coverage help, you can consider non-insurance sources of support like:
- Lower-cost drugs from countries like Canada
- Free or low-cost medicines supplied by charities, patients’ organizations, or local medical clinics.
- Low-cost or Free medicines from Medicare Donut Hole assistance programs, managed by pharmaceutical manufacturers
Compare Part D Insurance Plans Online
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 Medicare Part D insurance plans online today, you can use the Medicare Plan Tool Finder. Fill out the rating form on our site so that we can give you different rates as charged by various insurance providers.
Although, the fastest and easiest way to get ideal coverage is by calling a broker at the number above.