Everyone loves the bite-sized, yumminess of donut holes from your favorite bakery…but we have a completely different reaction when the Donut Hole pertains to our prescription drug plans!
All too frequently I find myself explaining what the Donut Hole, or Coverage Gap is, to unsuspecting Medicare beneficiaries. For those of you who are new to Medicare, or have never reached the Donut Hole, here is a brief explanation:
All Medicare drug plans categorize medications into one of 5 tiers. Although there may be a small annual deductible, you will generally pay a copay, for each of your prescription drugs. At whatever point, in 2017, your total drug costs (your portion plus the portion paid by the carrier) exceed $3700, you will have reached the infamous Donut Hole or Coverage Gap.
At this point, the copays you have enjoyed will be replaced by a different formula – you will pay no more than 51% of the total drug cost for generics, and no more than 40% for brand name drugs. This will continue until your total-out-of-pocket drug costs reach $4950.
At $4950 of out-of-pocket drug costs, within the same calendar year, the Donut Hole/Coverage Gap ends, and is replaced with Catastrophic Coverage for the remainder of that year. You will now pay the greater of: 5% or $3.30 for generics and $8.25 for all other drugs.
The entire process starts over on January 1, 2018. Keep in mind that the annual deductible, copays and limits for the Coverage Gap may change from year to year. The updated information will be available with your Medicare plan renewal documents.
If you have questions or would like more information, please feel free to contact me: