With the new Affordable Care Act taking action, many Medicare related topics are going to be subject to consequent change. One of these topics is Medicare's Prescription Drug Coverage (Part D). One of the largest changes that is likely to occur is Part D's coverage gap-the “donut hole”. The Affordable Care Act contains benefits that will help make prescription drug coverage more affordable enabling more people to benefit from this plan. These benefits include:
- A discount on brand-name drugs when purchased through a pharmacy or mail order
- Partial coverage for generic drugs
What is a Donut hole, how do I get out of it, and how do I save money while in it?
Most Medicare Prescription Drug Plans have a limit on what they cover for prescription drugs; this limit is the “coverage gap” -also known as the “Donut Hole.” This coverage gap starts after you and your drug plan have spent a certain amount of money for covered brand-name drugs. Under the Affordable Care Act, once you reach the coverage gap you will be given a discount of 50% (in 2012) on brand-name drugs and a 14% discount on generic drugs . Over the next few years you will begin to pay less in the coverage gap until 2020 when the donut hole will be absolutely closed. Once you have reached the coverage gap limit you are held responsible to pay all retail drug costs out-of-pocket up to a yearly limit until you reach the “catastrophic” coverage ($ 4,700 as of 2012). Your yearly deductible, coinsurance / copayments and what you pay while in the donut hole all count towards your out-of-pocket yearly limit but the pharmacy's dispensary costs do not. However this limit does not include your monthly premiums from your Part D plan or what you pay for drugs that are not covered by the plan.
In short, while a person is in the coverage gap (donut hole) they must pay all expenses for their drug costs until they have reached that “catastrophic” limit- $ 4,700. Once you reach this limit you will then be only required to pay a nominal coinsurance fee for your medicines for the rest of that year-statistically meaning once you spend $ 4,700 out-of-pocket, you will only be liable to pay a small copayment for the rest of the year. Fortunately, there are some other ways you can save while in the coverage gap:
- You are currently enrolled in a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes prescription drug coverage (HMO or PPO, for example).
- You do not receive Low-Income Subsidy “Extra-Help” for prescription drugs-Medicare program that provides people with limited income to help pay drug costs.
- You have already reached the donut hole
Still confused? Take Mrs. Smith, for example:
Mrs. Smith has just entered the coverage gap: she goes to the pharmacy to buy her monthly prescribed brand-name drugs. The price is $ 40 and the dispensary is $ 5. Because of the discount she receives – 50% – she pays only $ 20 + the $ 5 dispensary cost = $ 25. Mrs. Smith will be responsible to pay $ 25 for her brand-name prescription but the full cost ($ 45) will count as the out-of-pocket limit helping her climb out of the coverage gap.
Lastly, the Medicare insurance experts at MedicareSolutions are available to help you further understand your rites as a Part D beneficiary.