Tag: Coverage Gap

What is the Medicare Donut Hole?

What is the Medicare Donut Hole?

What is the Medicare Donut Hole?

What is the Medicare Donut Hole or Doughnut Hole?

The Medicare Donut Hole (or Doughnut Hole) is a coverage gap in the Part D Prescription Drug Plan where beneficiaries could pay more for their drugs.

The Center for Medicare and Medicaid Services (CMS) calls the coverage gap a “temporary limit” on what their drug plan will cover.

Why Did My Drugs Get More Expensive this Month?

2020 Medicare Donut Hole Explained by MedicareLifeHealth.com

During Medicare’s Annual Enrollment Period (AEP) this year I was stationed at a pharmacy a few hours a week to answer people’s questions.

One gentleman came up to me and said, “The Pharmacist sent me over to you to ask you: Why did my drugs cost more this month? I get the same drugs each month, but this month, they cost me more!”

Yes sir, you have reached the Medicare Donut Hole in your Part D Prescription Drug Coverage. It was November, and this gentleman had been able to make it his other five years on Medicare without reaching the coverage gap.

However, this year, his drug costs were a little higher, and he hit the gap before the end of the year.

Will I hit the Coverage Gap?

The price changes in the coverage gap can be a shock if you have not experienced it before. So, let’s go over a little more information to prepare you for what might come.

When Does the Donut Hole Begin?

In 2020, the Part D Coverage Gap begins when you and your plan have spent $4,020 on prescription drugs. (In 2019, it was $3,820.) Thus, if you only spend $1,000 a year on drugs, the donut hole will not affect you.

Who Does the Coverage Gap Not Apply to?

  • People who pay less than $4,020 in drugs each year.
  • In addition, people who get extra help in paying for their drug plans (for example, low income subsidies and Medicaid beneficiaies) will not enter into the coverage gap.

When Does the Donut Hole End?

In addition, you may be wondering, when does medicare donut hole end? It ends once you and your drug plan have spent $6,350 in 2020 ($5,100 in 2019). You are then out of the coverage gap and have entered into Catastrophic Coverage.

During Catastrophic Coverage you will pay a much smaller amount of money for your drugs. This includes smaller co-insurances and smaller co-payments for the rest of the calendar year.

What am I Paying in the Coverage Gap (Medicare Doughnut Hole)?

As of 2020, Medicare will pay for 75% of BOTH brand name and generic drugs in the coverage gap. As a result, you will pay 25% of the cost of your drugs in the coverage gap.

However, there is a generic to brand name drug difference in what counts towards your out-of-pocket costs to get your out of the donut hole:

  • For generics, only your copayment counts towards getting you out of the coverage gap.
  • Conversely, with brand name drugs, 95% of the total price of the drug (your co-payment and what your plan pays) counts towards your out-of-pocket costs to help you reach the end of the gap.

There are some Medicare drug plans that includes coverage in the gap. According to CMS, ” you may get a discount after your plan’s coverage has been applied to the drug’s price. The discount for brand-name drugs will apply to the remaining amount that you owe.” You will need to speak to your plan to learn more.

What Costs Counts Towards the Coverage Gap?

Here are the costs that apply to your out-of-pocket expenses:

  • First, Your Annual Drug Plan Deductible
  • Second, Your Co-insurance and Co-Payments
  • Third, Your Discount on Brand-name Drugs in the Donut Hole Coverage Gap
  • Finally, Your Costs in the Coverage Gap

Here is what does not apply:

  • Your Plan Premiums
  • Any Pharmacy Dispensing Fees
  • Any Drugs Not-Covered by Medicare Part D

Need More Information on Part D Drug Coverage?

For Part D Sign-up Assistance

2020 Medicare Donut Hole Explained by MedicareLifeHealth.com
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Part D Prescription Drug Plans

Part D Prescription Drug Plans

Medicare Part D Prescription Drug Plan Information

Part D Prescription Drug Plans

Part D of Medicare covers Prescription Drugs. There are different Part D Prescription Drug Plans available. When you choose a plan you will find various costs and coverage. However, the government establishes a “standard level of coverage” that each plan must meet.

Each plan has a formulary – a list of prescription drugs – they cover. In addition, they have a tier system that ranks how much you will pay for each drug. For example, a generic drug for a specific condition might be in a lower price tier than a brand name of the same drug. You can learn more about Part D drug coverage at Medicare.gov.

Where Do I Get Part D Coverage?

You can have Part D Prescription Drug Plans by themselves (with Original Medicare Part A and Part B, but with or without a supplement) or as a part of your Medicare Advantage Plan.

What do Part D Prescription Drug Plans Cost?

Each plan will have a monthly premium (this is included in your plan premium if you have a MAPD plan). In addition, plans will also have yearly deductibles, co-payments, and costs in what is called the coverage gap. Plans will often try to help you try to save money on your drugs by offering generic options, pharmacy networks, and sometimes mail order programs.

What is the Coverage Gap (aka the Donut Hole) in Part D?

In most drug plan there is a limit on what the plan will cover. In 2020, this limit was $4,020 ($3,820 in 2019).

However, once you hit $6,350 in 2020 ($5,100 in 2019) in out-of-pocket expenses in a year, you enter Catastrophic Coverage and your costs go back down to paying only small co-payments for covered drugs.

Fortunately, this “hole” in the middle of coverage has been closing-up since 2010, and by 2020, it is basically the same as initial coverage until you enter the catastrophic zone. In 2019, you pay 25% of the plan cost for covered brand name drugs and 37% of the plan cost for generics. Click here to learn more about how these costs apply to your total for entering catastrophic.

Are Medicare Part D Prescription Drug Plans Necessary?

Part D coverage is technically optional coverage. However, if you do not enroll in a plan right when you are eligible (and you don’t have any other coverage in place the government would consider creditable drug coverage), you will face fines later when signing up. Basically, if you think you will ever need drug coverage, you probably should take on a plan immediately. Penalties are calculated based on how long you are without coverage and last as long as you have Part D coverage.

How and When can I get or switch a Part D Prescription Drug Plan?

If you have both Medicare Part A and Part B, you are eligible to enroll in a Part D Prescription Drug Plan. We are always advocates of you speaking with a licensed professional before you purchase a plan or switch plans. You can review plan options online, but going over your medications and concerns with a licensed agent may save you from trouble down the road.

Your IEP, Initial Enrollment Period, for Part D is the same 7 month period when you can enroll for Medicare. This starts 3 months before you turn 65, your birthday month, and the 3 months after. Your coverage begins the first day of the month you turn 65. However, you must sign-up in time for that to happen.

Much like an MA/MAPD Plan, switching Part D plans can occur during a Special Enrollment Period. (For example, if you are moving out of a plan’s territory.) Secondly, you can sign-up each year during the Annual Enrollment Period (AEP). AEP happens yearly from October 15th to December 7th.

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2020 Medicare Donut Hole Explained by MedicareLifeHealth.com
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