What is the Medicare Part D Donut Hole?
In March 2010, Congress passed The Affordable Care Act (ACA), sometimes called ObamaCare. This comprehensive health-care plan provided many improvement to Medicare including the closing of the Medicare Part D coverage gap by the year 2020.
The Coverage Gap, often referred to as the “Donut Hole”, occurs once you and your drug plan have spent a certain amount of money for drugs. The coverage gap causes Medicare Members to pay a higher portion of the drug costs, after their discounts. Members stay in the Gap until they reach the other end of the gap, referred to as the Catastrophic Coverage Period. The out-of-pocket portion the Medicare Member pays will decrease until 2020.
See below for more on how this will function and affect Medicare Part D prescription drug plans.
How does the discount work?
- In 2017, a member’s cost share is 40% of the plan’s cost for the brand name drug when you are in the Coverage Gap
- You get these savings if you buy your prescriptions at a pharmacy or order them through the mail.
- Although you’ll pay no more than 40% of the price for the brand-name drug in 2017, 90% of the price—what you pay plus the 50% manufacturer discount payment—will count as out-of-pocket costs which will help you get out of the coverage gap.
Mrs. Anderson reaches the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there’s a $2 dispensing fee that gets added to the cost. Mrs. Anderson pays 40% of the plan’s cost for the drug and dispensing fee ($62 x .40 = $24.80).
The amount Mrs. Anderson pays ($24.80) plus the manufacturer discount payment ($30.00) count as out-of-pocket spending. So, $54.80 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $7.20, which is 10% of the drug cost and 60% of the dispensing fee paid by the drug plan, doesn’t count toward Mrs. Anderson’s out-of-pocket spending.
- In 2017, a member’s cost share is 51% of the plan’s cost for the generic drug when you are in the Coverage Gap.
- The coverage gap will decrease each year until it reaches 25% in 2020.
- For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
Mr. Evans reaches the coverage gap in his Medicare drug plan. He goes to his pharmacy to fill a prescription for a covered generic drug. The price for the drug is $20, and there’s a $2 dispensing fee that gets added to the cost. Mr. Evans will pay 51% of the plan’s cost for the drug and dispensing fee ($22 x .51 = $11.22). The $11.22 he pays will be counted as out-of-pocket spending to help him get out of the coverage gap.
What is the Difference between Brand Names and Generic Drugs?
What counts towards the coverage gap
- Your yearly deductible, coinsurance, and copayments
- The discount you get on brand-name drugs in the coverage gap
- What you pay in the coverage gap
Items that don’t count towards the coverage gap
- The drug plan premium
- Pharmacy dispensing fee
- What you pay for drugs that aren’t covered
Should get a discount?
If you think you’ve reached the coverage gap and you don’t get a discount when you pay for your brand-name prescription, review your next “Explanation of Benefits” (EOB). If the discount doesn’t appear on the EOB, contact your drug plan to make sure that your prescription records are correct and up-to-date. Get your plan’s contact information from a Personalized Search (under General Search), or search by plan name. If your drug plan doesn’t agree that you’re owed a discount, you can file an appeal.
READ MORE: http://www.medicare.gov/pubs/pdf/11493.pdf