The Medicare Part D coverage gap (informally known as the Medicare donut hole) is a period of consumer payment for prescription medication costs which lies between the initial coverage limit and the catastrophic-coverage threshold, when the consumer is a member of a Medicare Part D prescription-drug program administered by the United States federal government. The gap is reached after shared insurer payment – consumer payment for all covered prescription drugs reaches a government-set amount, and is left only after the consumer has paid full, unshared costs of an additional amount for the same prescriptions. Upon entering the gap, the prescription payments to date are re-set to $0 and continue until the maximum amount of the gap is reached: copayments made by the consumer up to the point of entering the gap are specifically *not* counted toward payment of the costs accruing while in the gap.
The Obameter: Close the "doughnut hole" in Medicare prescription drug plan
The health care bill signed into law by President Barack Obama is poised to “close the ‘doughnut hole’ in the Medicare Part D Prescription Drug Program that limits benefits for seniors with more than $2,250 but less than $5,100 in annual drug costs.” First, some background on the doughnut hole. In 2010, seniors in the Medicare Part D program must pay the first $310 for prescriptions before coverage kicks in. For subsequent total drug costs between $310 and $2,830, the government will pay 75 percent and beneficiaries pay 25 percent. (The numbers are different from Obama’s promise due to increases since he made the statement.) Then, starting at $2,830, beneficiaries must pay the entire costs until they hit an out-of-pocket limit of $4,550. That’s what’s known as the doughnut hole. After that, “catastrophic coverage” begins, with the government paying 95 percent of costs. The hole won’t be closed immediately, but will instead be phased in over the next 10 years. This year, beneficiaries who reach the doughnut hole will receive a $250 rebate. After that, federal subsidies will enable the patient’s share of the payment to be gradually reduced from 100 percent to 25 percent by 2020. At 25 percent, the doughnut hole range will have the same co-pay rate as the prior range. Separately, brand-name drugmakers will be obligated to provide discounts for prescriptions filled through Medicare Part D starting in 2011. The hole will hang on for a while, but its eventual disappearance is now enshrined in law. Since Obama did not specify a timeline in his promise, we are rating it a Promise Kept.