28 Jan Medicare “Donut Hole”
What is the Medicare Donut Hole?
The Medicare “Donut Hole” is also known as the coverage gap. The coverage gap occurs when a medical patient spends an allotted amount on prescription medications. After that amount has been reached, medication costs must be paid for out-of-pocket. However, due to the Affordable Care Act, the amount a patient is responsible for will decrease until it hits 25 percent in 2020.
How Medicare Part D coverage works
The “Donut Hole” is only experienced by Medicare patients who pay a monthly premium for Medicare Part D. At first, patients pay the complete cost of their prescription drugs until they reach their deductible amount, which is usually just a few hundred dollars.
Then, the Part D plan kicks in and allows the insured to pay just 25 percent of their drug costs until they reach another, higher deductible.
The “Donut Hole”, or Medicare coverage gap, occurs when you reach the second deductible. At this point, the insured is responsible for paying a larger chunk of their drug costs until it reaches the out-of-pocket spending limit outlined in the plan. Once that amount is reached, only about 5 percent of the total costs of drugs covered must be paid.
Covering costs in the “Donut Hole”
Some Medicare Part D plans offer coverage options that kick in when the gap is reached. However, these plans charge higher monthly premiums. A fixed co-payment plan may also be an option which makes the cost of prescription drugs easier to predict, but it costs more than the basic plan as well.
Medicare Extra Help is also an option for those who qualify. This program allows the insured to pay reduced costs or no costs for prescription drugs.
In addition, the Affordable Care Act helps relieve the burden of those who experience the Medicare “Donut Hole”. As part of this health reform law, the insured can receive rebates, pay less for generic Part D drugs, and less for brand-name prescriptions. By 2020, the law will close the coverage gap and the insured will pay 25 percent of drug costs until the yearly out-of-pocket spending limit is reached, at which time only five percent of prescription costs need to be paid.