In the United States, millions over the age of 65 rely on Medicare for their health insurance. Those who have certain disabilities or kidney failure may also be covered by Medicare before they reach age 65.
For those covered by Medicare, the “donut hole” is a period of time each year during which coverage for prescription drugs is not covered by Medicare part D. What does this mean for those who are covered by Medicare? Here’s what you need to know about the Donut Hole.
Medicare Part D – Prescription Benefits
Before 2006, Medicare did not include insurance for prescription drugs. As the costs of drugs skyrocketed out of the reach of most people, Medicare Part D was created. This optional insurance may be purchased by people receiving Medicare. Aside from the monthly premium for Part D, the rules for how much the plan pays for prescriptions and when are more complex.
How Prescription Coverage Works with Medicare Part D
Medicare Part D Prescription Drug Plans pay different levels of benefits depending on how much you’ve spent on prescriptions that year. There is more than one plan with differing monthly premiums and coverage rates, but those guidelines are true of most policies under Part D.
- Deductible – There is a minimum deductible you must meet before insurance covers any of the cost of prescriptions. You are responsible for paying monthly premiums for insurance plus 100% of the cost of prescriptions until the deductible is met.
- Phase 1 of prescription coverage – Once you meet the deductible, you Part D plan will cover the standard percentage of medication for your policy. You may have a 25% coinsurance rate with your plan, meaning your insurance will pay 75% of the cost. This level of coverage continues until you reach a threshold set for your specific plan.
- “Donut Hole” – If you have prescription costs that exceed the plan threshold for the calendar year, there is a coverage gap referred to as the donut hole. While in the gap, you are required to pay a greater percentage of the cost of prescriptions.
- Catastrophic coverage – In 2018, the limit for drug costs before catastrophic coverage kicks in is $5,000. If you reach this limit, you are responsible for only a very small percentage of the cost of prescriptions for the remainder of the calendar year – about 5%.
A Shrinking Hole
Since the passing of the Affordable Care Act (ACA) in 2010, the donut hole has been closing. Companies who manufacture prescription drugs are required by Congress to contribute some of the cost of the medications for seniors in the donut hole of coverage until catastrophic coverage kicks in. The ACA would have closed the gap entirely by 2020, and recent legislation signed by President Trump has moved the deadline up a year to 2019. Next year there will be no coverage gap for Medicare Part D insureds.
When Part D plans were created, the donut hole was intended to encourage seniors to utilize generic medication over the more expensive name brand drugs. However, the cost of prescription drugs is controlled by pharmaceutical companies. Drug manufacturers are now required to reduce their prices for Medicare Part D recipients who reach the threshold of coverage before the next level of coverage (catastrophic) kicks in.
Still confused? Intercoastal Medical Group in Sarasota and Manatee, Florida helps patients manage their health through excellent primary care and top specialists within the same practice. Their insurance experts are happy to help you navigate the complexities of Medicare and other healthcare coverages. Contact us today for an appointment with one of our experienced and caring providers. You can also request an appointment online now. We have eight locations for your convenience and see patients on weekends in Sarasota and Bradenton.