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You may not know that under Medicare Part D, you may have a prescription drug coverage gap, often referred to as the “donut hole,” during which you might have limited prescription drug coverage. Find out exactly what this coverage gap is, and learn how to bridge the prescription drug coverage gap.
Most Medicare Part D Prescription Drug Plans have a coverage gap, sometimes called the Medicare “donut hole.” This means that after you and your Medicare Prescription Drug Plan have spent a certain amount of money for covered prescription drugs, you then may have to pay up to a certain percentage of each medication’s cost.
There are Medicare Prescription Drug Plans that offer some coverage while you’re in the coverage gap; some plans provide coverage for generic drugs, for example. However, plans with gap coverage may charge a higher monthly premium. Check with the Prescription Drug Plan first to see if your medications would be covered during the coverage gap.
If your out-of-pocket spending on prescription drugs reaches a certain limit within one year, you may leave the coverage gap and enter the catastrophic phase. Your plan’s yearly deductible, coinsurance, or copayments, and what you pay while in the coverage gap, all count toward this out-of-pocket limit. The limit doesn’t include the plan’s premium.
Once you enter the catastrophic coverage phase, you will only pay a small coinsurance amount or copayment for the rest of the year.
The example below shows the costs for covered drugs for a Medicare Prescription Drug Plan and the coverage gap. Ms. Jones enrolls into the ABC Prescription Drug Plan. She uses her Medicare Prescription Drug Plan membership card when she buys prescriptions.
|Monthly Premium – Ms. Jones pays a monthly premium throughout the year.|
|1. Yearly Deductible||2. Copayment or Coinsurance||3. Coverage
|4. Catastrophic Coverage|
|Ms. Jones pays for the full cost of her prescription drugs until she reaches her plan’s deductible, which is $415 (the maximum Part D deductible in 2019), before her plan starts to pay its share.||Ms. Jones pays a copayment, and her plan pays its share for each covered prescription drug until what they pay (plus the deductible) reaches $3,820 in 2019.||Once Ms. Jones and her plan have spent $3,820 for medications, she is in the coverage gap. In 2019, she pays up to 25% of her plan’s price for her covered brand-name prescription drugs and up to 37% of her plan’s price for covered generic drugs. What she pays (and the discount paid by the drug company for brand-name medications) count as out of-pocket spending, and help her get out of the coverage gap.||If Ms. Jones’ out-of-pocket costs reach $5,100 for the year of 2019, her coverage gap ends. Now she only pays a small copayment or coinsurance amount for all other prescription drugs until the end of the year.|
People who get Medicare Extra Help to pay prescription drug costs won’t have a coverage gap and will pay only a small copayment if they reach catastrophic coverage. Extra Help is a special part of Medicare prescription drug coverage that may help people with limited incomes with their prescription drug costs.
Qualifying for Extra Help can save a lot of money. If you qualify for “full” Extra Help, you receive coverage throughout the year (no coverage gap). You’ll pay no more than $3.40 for each generic drug and $8.50 for each brand-name covered prescription drug (in 2019). If you qualify for “partial” Extra Help, you might receive coverage throughout the year and pay a reduced premium and deductible, as well as part of the cost of your prescription drugs.
To find out if you qualify for Extra Help, call
1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Medicare representatives are available 24 hours a day, seven days a week.
Federal health-care reform legislation — the Affordable Care Act, also called Obamacare — has addressed the problem by steadily reducing the prescription drug coverage gap over several years. By 2020, the prescription drug coverage gap will be closed completely, meaning that the donut hole will cease to exist, and you will only have to pay 25% of the cost of your prescription drugs.
This article is for general informational purposes, so when you consider enrolling in any specific plan, you should always check the plan benefits and details carefully to make sure you understand how that specific plan works.
Do you have more questions? Connect with any of our licensed insurance agents to answer your Medicare questions or discuss a Medicare plan option that may be right for you.
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