As we approach the end of the year, many seniors are falling into the infamous “donut hole” or Medicare Part D prescription drug coverage gap and panicking at the costs.
Fortunately, the coverage gap has been steadily decreasing, thanks to changes from the Affordable Care Act, and fewer people are entering the gap stage. Moving forward, the gap will continue to shrink and fewer people will fall into it each year (source).However, those who do and are on a fixed income may experience serious financial strain as they are forced to choose between their prescribed medications and buying food or other basic necessities.
What is the “donut hole” or coverage gap?
The coverage gap happens when the Part D recipient and their drug plan have spent a certain amount for covered drugs. The amount for 2015 is generally $2,960 and for 2016 will be $3,310. At that time, the Part D recipient becomes responsible for 45% of brand name drugs and 65% of generics. In 2016, the responsibility remains the same for brand name drugs, but reduces to 58% for generics. This structure remains in place until the out-of-pocket amount set by the plan is spent. source
For 2015, the out-of-pocket amount that must be spent is $4700 for covered drugs since the beginning of the year to get out of the coverage gap. For 2016, the amount will be $4,850.
Why the donut analogy?
Think of the shape of a donut to represent the structure of this arrangement. Bite through the doughy-goodness of the donut (initial coverage phase in which Part D plan picks up the majority of cost) and discover the center of the donut, absence of doughy-goodness (coverage gap during which Part D recipient picks up costs up to a certain amount) and reach the other side of the donut for resumed doughy-goodness (prescription drug coverage at catastrophic coverage stage).
Translation: Medication co-pays go way up in price after initial coverage phase and go back down after Part D recipient spends a certain amount of their own money, if they have it to spend.
How to avoid the coverage gap:
- Price out medications at different pharmacies
- Find out if using a mail-order pharmacy for three-month supply of drugs has a lower co-payment
- Find out if generics are an option by discussing with provider
- Ask for medication samples from provider
- Use preferred pharmacy by prescription plan- call member services for a list if not aware of options
- Check with medication manufacturers for assistance programs (eligibility will depend on income and if in the donut hole already or not)
- Find out if eligible for state subsidy and/or Extra Help program to help with costs
Good news for the future!
The donut hole will be closed by 2020! At that time, Part D recipients will pay no more than 25% of generic and brand name medications. This will be the same amount they pay once meeting the deductible until meeting the out-of-pocket spending limit.
Until then, watch the gap!