The Medicare “donut hole” is a term used to describe a gap in coverage in the Medicare Part D prescription drug plan. Under this plan, there is a coverage gap, also known as the donut hole, where beneficiaries must pay a higher percentage of the cost of their prescription drugs.
Here’s How The Donut Hole Works
Initial coverage: The Medicare Part D plan covers a certain amount of the cost of prescription drugs.
Coverage gap (donut hole): Once a beneficiary reaches a certain level of drug spending, they enter the coverage gap, also known as the donut hole. During this time, the beneficiary must pay a higher percentage of the cost of their prescription drugs.
Catastrophic coverage: After a beneficiary reaches a certain level of drug spending, they enter a period of catastrophic coverage. During this time, the Medicare Part D plan covers a much larger portion of the cost of prescription drugs.
It’s good to note that the thresholds for entering the coverage gap and catastrophic coverage change yearly. In addition, the Medicare Part D plan also includes discounts on prescription drugs for beneficiaries in the coverage gap, which can help reduce the amount they have to pay out of pocket.
If you have Medicare Part D and have questions about your coverage or the donut hole, you can contact Medicare or your plan directly for more information.
How do I get Around The Medicare Donut Hole?
There are a few strategies that you can use to try to avoid or minimize the impact of the Medicare Part D coverage gap (also known as the donut hole). Here are a few options:
Compare plans: Medicare Part D plans have different coverage levels and costs, and some plans may have lower premiums and out-of-pocket costs. By comparing plans, you can find one that fits your needs and budget better. You can compare plans using the Medicare Plan Finder tool on the Medicare website.
Use generic drugs: Generic drugs are typically less expensive than brand-name drugs and can help you save money on your prescription medications. If you are prescribed a brand-name drug, ask your doctor if a generic version is available.
Use mail-order pharmacies: Some Medicare Part D plans offer lower copays for prescription drugs purchased through a mail-order pharmacy. Using a mail-order pharmacy can save money on your prescription medications.
Use your plan’s formulary: A formulary is a list of prescription drugs covered by a Medicare Part D plan. Some plans have a tiered formulary, which means that drugs in certain tiers may have higher copays. Using drugs on a lower tier of your plan’s formulary may save money on your prescription medications.
Use manufacturer coupons: Some drug manufacturers offer coupons or other financial assistance programs to help reduce the cost of prescription drugs. These programs may be available to Medicare beneficiaries, so it’s worth checking with the manufacturer to see if you are eligible.
It’s important to note that these strategies may not eliminate the impact of the Medicare Part D coverage gap. If you have questions about your coverage or are having difficulty paying for your prescription drugs, you can contact Medicare or your plan directly for more information and assistance.
What Counts Towards The Donut Hole?
The Medicare Part D coverage gap, also known as the donut hole, is when beneficiaries are required to pay a higher percentage of the cost of their prescription drugs. The amount a beneficiary pays out of pocket for their prescription drugs during this time is known as the “true out-of-pocket” (TrOOP) costs.
TrOOP costs count towards the coverage gap and include:
Deductibles: A beneficiary must pay before their Medicare Part D plan begins to cover the cost of their prescription drugs.
Copays: The fixed amount that a beneficiary pays for a prescription drug, regardless of the drug’s cost.
Coinsurance: The percentage of the cost of a prescription drug that a beneficiary must pay.
The amount the plan pays for the drug: This includes the amount that the plan pays for the drug and any discounts or other cost-sharing arrangements.
It’s vital to note that TrOOP costs do not include premiums, the cost of drugs not covered by the plan, or the cost of drugs purchased outside the United States.
The thresholds for entering the coverage gap and catastrophic coverage change each year. You can find more information about the current thresholds on the Medicare website or by contacting Medicare or your plan directly.
How Long Does The Medicare Donut Hole Last?
The length of time a Medicare beneficiary spends in the coverage gap, also known as the donut hole, depends on how much they spend on prescription drugs. The coverage gap begins once a beneficiary reaches a certain level of drug spending, known as the initial coverage limit. The beneficiary remains in the coverage gap until they reach a higher level of drug spending, known as the out-of-pocket threshold.
The initial coverage limit and the out-of-pocket threshold change each year. For example, in 2021, the initial coverage limit is $4,130, and the out-of-pocket threshold is $6,550. If a beneficiary spent more than $4,130 on prescription drugs in 2021, they would enter the coverage gap. They will remain in the coverage gap until they have spent a total of $6,550 on prescription drugs, at which point they will enter a period of catastrophic coverage.
It’s important to note that the Medicare Part D plan includes discounts on prescription drugs for beneficiaries in the coverage gap, which can help reduce the amount they have to pay out of pocket.
If you have Medicare Part D and have questions about your coverage or the donut hole, you can contact Medicare or your plan directly for more information.
Do Medicare Advantage Plans Cover The Donut Hole?
Medicare Advantage plans, also known as Medicare Part C plans, are private health insurance plans approved by Medicare and available to beneficiaries enrolled in Original Medicare (Medicare Part A and Part B). These plans typically offer additional benefits and may have lower out-of-pocket costs than Original Medicare.
Some Medicare Advantage plans may offer coverage for prescription drugs, including coverage for the Medicare Part D coverage gap, also known as the donut hole. However, not all Medicare Advantage plans cover prescription drugs, and those that do may have different coverage levels and costs. It’s important to check with your plan to see what is covered and what your out-of-pocket costs may be.
Suppose you are enrolled in a Medicare Advantage plan that does not cover prescription drugs. In that case, you may be able to enroll in a stand-alone Medicare Part D prescription drug plan to get coverage for your medications. You can compare Medicare Part D plans using the Medicare Plan Finder tool on the Medicare website or on ClearmatchMedicare.
If you have Medicare Advantage and have questions about your coverage, including coverage for prescription drugs, you can contact your plan directly for more information.
