Medicare Donut Hole

If you have Medicare, you may assume that you’re covered for your medical needs and prescriptions for the entire time you have the coverage. Unfortunately, that may not be the case for everyone.

It’s all due to what is referred to as the “Medicare Donut Hole”. If you’ve already been affected by it, you know that it can get costly. Read on to learn more about what it is and how you can ease the financial burden that goes along with it.

What is the Medicare Donut Hole?

The Medicare Donut Hole is a coverage gap that puts a temporary limit on what Medicare will cover for prescription drugs. This does not affect everyone. But, if you do take a number of prescription drugs, it likely will.

Basically after you and your drug plan have paid a certain amount for medication, you enter the coverage gap.

For example, in 2018, once you and your drug plan spend $3,750 on prescriptions, you enter the coverage gap. When you reach that point you will pay no more than 35% of the price for the brand name drug during 2018. If you receive generic drugs, Medicare will pay 56% of the cost while you cover the remaining 44%. You pay this until you reach a certain limit. Once you reach that limit ($5000 for 2018), then your Medicare prescription coverage kicks in again.

When you reach this point it is referred to as “catastrophic coverage”. It assures you will only pay a small coinsurance amount or payment for covered drugs for the rest of the year.

Any copayments or coinsurance you pay during the time you are in the coverage gap will be applied towards it, helping you to get out of the coverage gap quicker.

If you’ve had Medicare for several years you know that each year the amount you spend to get into the coverage gap and the amount you have to spend to get out of it has changed.

The coverage gap was originally created to encourage Medicare recipients to get generic drugs over brand-name drugs to lower costs. But, for some patients that’s not possible because the necessary drugs are not made in a generic form. So, for those patients the coverage gap has proved to be nothing but costly because they reach their limit that much quicker and are then forced to pay more out of pocket.

It’s important to note that those who receive what Medicare calls “Extra Help” in paying for their Part-D prescription coverage are not affected by the coverage gap.

There is some bit of good news when it comes to the coverage dap. Congress has been working to close the donut hole for Medicare Part-D recipients. Beginning in 2019, those enrolled in Medicare Part-D will pay 25% of the cost of their prescription drugs when they enter the coverage gap until they reach their catastrophic coverage. The thought here is to lower the out-of-pocket cost for seniors until their catastrophic coverage kicks in. The ultimate goal is to completely close the coverage gap by 2020.

Ways to Avoid the Medicare Donut Hole

If you are affected by the “Medicare Donut Hole” there are no insurance plans to help cover your costs during that time period because it is only temporary. Nonetheless, for seniors on a fixed income, any increase in prescription drug costs is a burden.

There are certain things you can do to avoid getting yourself into the coverage gap:

  1. Buy Generics When Possible – This will help to lower your costs and help to avoid the coverage gap. Since some medicines do not have a generic form, try to do this as often as possible so that if you have to take a brand-name drug it won’t affect your benefits as much.
  2. Order Medicines by Mail and in Advance – There are some Medicare D Prescription Drug plans that offer discounts if you order medicines by mail and in a greater supply versus picking up a month’s supply at the drug store.
  3. Ask About Discounts – When there is an expensive drug that is available by name brand only, doctors’ offices sometimes receive discount cards from the manufacturers. Ask your doctor about this when prescribed a specific medication.
  4. Look Into the Extra Help Program – As the program name suggests, you can get extra help with your Medicare costs if you qualify. Income and assets are used to determine if you qualify.

While there is no supplemental insurance that can help you during the coverage gap, there are some Medicare Advantage Plans that offer more generous benefits during this time. This is something to look into if you anticipate that your drug costs will put you into the coverage gap.

Remember, not all Medicare plans are created equal. It’s always important to ask what types of coverage as well as what aid you may be eligible to receive. Any little bit you can get will help in the end.

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