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Medicare Part D Donut Hole

May 16 2018

By Lindsay Engle

Since the Affordable Care Act, the Medicare Part D coverage gap, informally known as the Medicare donut hole has been closing. This is great for enrollees who were expecting to wait until 2020 for the changes to go into effect.

Most Medicare drug plans have this coverage gap. It is a temporary limit on what the drug plan will cover for drugs.

Not everyone with a Part D plan will reach the Donut hole phase. The coverage gap begins after you and your plan have spent $3,750 on covered drugs. This amount may change each year. Anyone who receives extra help paying Part D costs won’t enter the coverage gap.

To move into the catastrophic coverage phase beneficiaries would have to pay $5,000 for prescribed drugs out of their own pocket. Once that $5,000 threshold is met, they exit the donut hole and brand name drugs are covered at 95 percent.

This is good news for Medicare recipients who pay high dollar amounts for their brand name medications or specialty drugs.

Brand Name Prescriptions

In the coverage gap you’ll pay no more than 25 percent of the price for brand-name drugs in 2019. Some plans may offer higher savings in the coverage gap.

Manufacturers will cover 50 percent of brand-name costs and this will also count as out of pocket costs which will help you get out of the donut hole.

No more cost vs. quality decisions for seniors. To clarify, the coverage gap still exists, but pharmaceutical companies will be required to pick up more of the cost.

Generic Drugs

Generic drugs are copies of brand-name drugs that have the same dosage, intended use, effects, side effects, route of administration, risks and safety as the original drug.

Generics only become available after the patent expires on a brand-name drug. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.

Generic drugs will be covered at 63 percent in 2019, which is an increase from 2018. If you have a Medicare drug plan that already includes coverage in the gap, you may get an additional discount after your plan’s coverage has been applied to the drug’s price.

What Counts Towards the Coverage Gap

  • Your yearly deductible, coinsurance and copayments.

  • The manufacturer's discount you get on brand drugs in the coverage gap.

  • Your out of pocket costs in the coverage gap.

What Doesn’t Count Towards the Coverage Gap

  • Your Part D premium.

  • Pharmacy dispensing fees.

  • Your out of pocket costs for drugs that are not covered.
    • If you are not sure a drug is covered, check your plans formulary or contact your insurance provider.

If You Think You Should Get a Discount

Review your “Explanation of Benefits” (EOB) if you don’t get a discount when you pay for your brand-name prescriptions and you have reached the coverage gap.

If the discount doesn’t appear in the EOB contact your Part D plan to make sure your prescription records are correct and up to date.

You can get your plans contact information from your insurance card. If your drug plan doesn’t agree that you are owed a discount, you can always file an appeal.

After the Coverage Gap

Once you have spent the $5,000 out of pocket in 2019, you are out of the coverage gap. Your out of pocket costs in the donut hole will be reduced in 2019 with the insurance companies taking on a higher percentage of the drug cost.

Once you get out of the donut hole, you automatically get “catastrophic coverage.” It assures you only pay a small coinsurance amount or copayment for covered drugs for the remainder of the year. Prescription drugs are covered up to 95 percent while in the catastrophic coverage phase.