Once you and your Part D drug plan have spent $2,840 for covered drugs, you will be in the donut hole. Previously, you had to pay the full cost of your prescription drugs while in the donut hole. However, in 2011, you get a 50% discount on covered brand-name prescription medications. The donut hole continues until your total out-of-pocket cost reaches $4,550. This annual out-of-pocket spending amount includes your yearly deductible, copayment, and coinsurance amounts.
Medicare Part D coverage gap
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.
How to Avoid the Medicare Part D Donut Hole
The Extra Help Program helps low-income Medicare recipients avoid the donut hole completely. According to the Social Security Administration, the program provides about $4,000 in cost assistance to each recipient per year. Income and financial resource limits apply, and both are re-evaluated annually. As of June 2015, annual income limits are $17,655 for an individual or $23,895 for a married couple. Financial resources, which include assets such as bank accounts, stocks and bonds, can’t exceed $13,640 for an individual or $27,250 for a married couple. There are options to apply online, over the telephone or at your local Social Security Office.
What Is the Medicare Donut Hole?
Medicare introduced Part D in 2006. Under the initial rules, a senior who signed up with a PDP paid all drug costs until she met the plan’s deductible. After that, Medicare kicked in. The PDP paid 75 percent of covered drugs. The donut hole appeared if drug costs rose above an annual dollar limit. Above the limit, a senior paid 100 percent of prescription costs until she hit a second limit on out-of-pocket spending. Medicare then kicked in and typically paid 95 percent of drug costs. The limits rise over time, based on inflation.
Closing the Medicare Part D Donut Hole
The Affordable Care Act (ACA) includes important improvements to Medicare prescription drug coverage (Part D) such as reducing expenses for seniors in the donut hole now and eliminating the gap altogether by 2020. Seniors receive additional savings each year on their prescription drugs until the donut hole is closed. The ACA also provides additional assistance for low-income beneficiaries. Since passage of the ACA in 2010, more than 9.4 million people with Medicare have saved over $15 billion on prescription drugs.
Medicare Part D Donut Hole – 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 drug plan have spent a certain amount of money for covered prescription drugs, you then have to pay all costs out-of-pocket for the drugs, up to a certain out-of-pocket limit. The 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 drug plan’s premium.
Medicare Part D Donut Hole
It’s important to continue to stick with your prescription drug plan and pharmacy once you hit the coverage gap. If you have a Medicare prescription drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the price of the drug. The discount for brand-name drugs will apply to the remaining amount that you owe.