Doughnut or donut, the Medicare Donut Hole continues to confuse and confound Medicare subscribers. Many Medicare subscribers have found the donut Hole to be as confusing as the tax code which is never good news for most Americans. Medicare recipients are advised to consult a licensed Medicare specialist to explain the intricacies of the law and the plans available in order to properly assess your current coverage and/or desire for additional coverage.
Calculating The Donut Hole
For 2017 the donut hole is triggered when the Medicare Part D subscriber’s total retail drug costs reach $3700.00. The trigger amount is based on the retail negotiated cost of the medication and not what you actually pay at the pharmacy. Additionally the combined cost includes your deductible which is $400.00 for 2017.
Each Part D drug plan can have different negotiated costs as subscribers individually purchase Part D plans from different insurers. The calculations of what a subscriber owes after the $3700.00 is reached also differs depending if the drug is generic or brand name. The out of pocket threshold for prescription purchases in 2017 is $4950.00; the donut hole is the insurance coverage gap between $3700.00 and $4950.00 where the subscriber is responsible for 100 % of the prescription drug costs.
Cost Of Prescription Drugs & Medicare Part D & The Donut Hole
Consumers are advised to cost and compare Part D plans prior to purchasing insurance just as with any major purchase. An all encompassing view of current medications, cost of medications, health and any existing conditions should be considered in the cost analysis of a Part D plan.
It is wise to take the time to compare drug prices, costs of generic versus brand name drugs, consider purchasing a 90 day drug supply when allowed and investigate mail prescription programs; all can lower prescription drugs costs and slow down the slide into the donut hole.
Caution to the adventurous senior who may be considering travelling outside the United States to purchase prescription drugs in an effort to save money! Unfortunately none of the drugs purchased will be covered under your Medicare Part D plan unless you file for an exception to have it included in your formulary (accepted drug list). In almost every case, exceptions are denied but you always have the option if you have the time and expertise to file file multiple appeals.
Once you have reached the out of pocket threshold maximum you will have passed through the donut hole and entered the Catastrophic Coverage section of Medicare. From that point forward you pay a small copayment or coinsurance and the amount will differ depending upon if the drug is generic or brand name.
AARP Dounut Hole Calculator
AARP provides a very good and easy to use Doughnut Hole Calculator on its’ website to assist subscribers in determining if you are at risk to enter the donut hole. There are many helpful tools on the AARP site for assistance with Medicare and costs.
ACA and Extra Help Program
The Affordable Care Act (ACA) also known as “Obamacare” which was enacted in 2010 will have a positive effect on decreasing the donut costs through 2020 and will eventually close the gap.
The ACA instituted a sliding scale beginning in 2010 that changes the consumer’s responsibility and the Part D Drug Plan’s responsibility. Each year the consumer will pay less for prescription drug expenses while the Drug Plan will pay more until 2020 when the phase-out of the donut hole is complete and the consumer is only responsible for the 25% co-pay. Each year the sliding scale will determine the discount percentage Medicare participants pay for brand-name drugs and generic drugs.
The ACA has also enhanced the much needed outreach projects to make the elderly aware of additional services they may qualify for. Programs like EXTRA HELP have been instituted to assist those who qualify with the cost of Part D expenses. Assistance can be as much as $4,000 per year and is intended for those subscribers with limited income and resources. Seniors can visit the Social Security Medicare site for information regarding Medicare programs and assistance; for those without internet accessmost senior centers will have a complete listing of available resources and assist in the qualification process.
Part D Enrollment Penalty
New enrollees in Medicare should also be aware of the Part D Penalty which occurs if a Medicare enrollee is without Part D coverage or prescription coverage 63 consecutive days or more. The penalty is calculated based on how long the enrollee did not have coverage after the Initial Enrollment period concluded. The penalty will be added to your monthly premium.