Medicare Part D coverage gap

Posted by:  :  Category: Medicare

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.

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.

Part D Information for Pharmaceutical Manufacturers

The Medicare Coverage Gap Discount Program (Discount Program) makes manufacturer discounts available to eligible Medicare beneficiaries receiving applicable, covered Part D drugs, while in the coverage gap. In order to participate in the Discount Program, manufacturers must sign an agreement with CMS to provide the discount on all of its applicable drugs (i.e. prescription drugs approved or licensed under new drug applications or biologic license applications). Beginning in 2011, only those applicable drugs that are covered under a signed manufacturer agreement with CMS can be covered under Part D.

Medicare Part D Drug Coverage

Copayments: Once you’ve satisfied the annual deductible, if any, you’ll need to pay 25 percent of the next $3,300 of your prescription costs (i.e., up to $825 out-of-pocket) and your Medicare drug plan will pay 75 percent (i.e., up to $2,475). After that, there’s a coverage gap; you’ll need to pay 100 percent of your prescription costs until you’ve spent an additional $3,725 (some plans offer coverage for this gap). However, once your prescription costs total $7,425 (i.e., your out-of-pocket costs equal $4,950–you’ve paid a $400 deductible + $825 + $3,725 in drug costs, and your Medicare drug plan has paid $2,475), your Medicare drug plan will generally cover 95 percent of any further prescription costs. For the rest of the year, you’ll pay either a coinsurance amount (e.g., five percent of the prescription cost) or a small copayment for each prescription, whichever is greater.

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