medicare donut hole

For seniors, the Donut Hole isn’t nearly as nice as it sounds. We’re not talking about the part of a pastry that your grandkids put their fingers through; we’re talking about Medicare Part D, Medicare’s prescription drug plan. Many people have heard of the Donut Hole, but it’s hard to understand what it means—even if you’re stuck in it.

There’s good news. The Donut Hole is closing, and by 2020 it’s expected to be no more. How is that going to happen? We’ll tell you.

What is the Medicare Donut Hole?

The Donut Hole refers to a coverage gap in your Medicare prescription drug coverage—a limit on what your plan will spend on your drugs. In 2016 this amount is $3,310. Once your total drug cost reaches $3,310 (what you pay plus what your insurance company pays ) your plan covers less of the cost. In 2016, you’ll pay 45% of brand name drugs and 58% of generics once you’ve hit the Donut Hole.

Seniors who take medications might reach the coverage gap very quickly, or they may never reach it. It all depends on the drugs you take, which Medicare Part D plan you have, and the price for the drug that your individual plan has negotiated with the drug company. There is no one set drug price.

However, many seniors do take multiple medications and reach the coverage gap quickly. The Donut Hole has been frustrating for them since its inception in 2006.

But there’s good news!

Even if you fall in the Donut Hole, there’s a way out. If your out-of-pocket costs before the Donut Hole plus what you pay for your drugs in the Donut Hole reaches $4,850 in 2016—Medicare and your plan kicks in again and you only pay 5% of your costs until the end of the year.

Going, Going …

The Donut Hole is closing. In 2006, citizens in the gap had to pay 100% of their drug costs. Now it’s only 45% for name brands and 58% for generics. Your plan will also pay more now before the coverage limit kicks in; in 2006, the limit was $2,250. Now it’s $3,310. In other words, your plan will cover your drugs for longer, and you will pay less once you’re in the hole. Think of the hole more like a tunnel; on one side, the price they’ll pay is growing, and on the other side, the amount you have to spend is shrinking. The tunnel is getting shorter. The Donut Hole is slowly being—we have to say it—eaten away.

Gone!

The Affordable Care Act has implemented a plan to phase out the Donut Hole slowly. By 2020, you will only be paying 25% of your costs in the Donut Hole, leaving you with drug costs that may be only slightly higher than your plan charges, anyway.

Knowing all that information, you’ll want to consider your drug coverage options carefully. You may opt to buy a Medicare Part D plan, or you may decide on a Medicare Advantage (Part C) plan. Medicare Advantage includes the coverage of Medicare Parts A, B, and usually D.

Either way, HealthMarkets can help you out. We offer Medicare Advantage and Medicare Part D policies, and our licensed agents are available in person, or we’re here 24/7 over the phone. Just call us at (800) 488-7621.

 

Infographic explaining the medicare donut hole

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