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What is the donut hole in Medicare?

Status: Open    Jun 04, 2015 - 08:06 AM


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Jun 11, 2015 - 11:02 AM

The donut hole is the part of Medicare D (drug benefit) in which the individual is expected to pay the full cost of their prescription drugs. In the first part of the plan for the year, the individual may pay a deductible and co-payment, while the plan pays for the remainder of the drugs. When the combined payment of the individual and the plan reaches a certain amount (approximately $2900) the plan moves into the next phase (donut hole) when the individual pays the full cost of the drugs. The plan remains in this phase until approximately $4700 is spent. The plan then moves into the next phase where the plan pays for most of the medications, until the end of the year.

Jun 24, 2015 - 06:14 AM

The coverage gap-- or as it's more commonly known, the doughnut hole, is one of the four coverage periods that people with Medicare Part D can enter throughout the year. Many people discover they've reached the doughnut hole when they unexpectedly get a big bill at the pharmacy.

You reach the doughnut hole after you have gone through the deductible (which is the first coverage perdiod. The 2014 deductible was $310, and now it is $320), and the initial coverage periods (the second period). In 2015, you enter the doughnut hole when your total drug costs reach $2,960. Your total drug costs are what you and your plan have spent on covered prescriptions since the beginning of the year.

Your costs at the pharmacy tempoarily increase when you're in the doughnut hole. In the past, you were usually responsible for the full cost of their prescriptions during this period. However, because of health reform, discounts are now available while in the coverage gap (the third coverage period). These discounts will increase every year until 2020, when the doughnut hole no longer exists. In 2015, the discount on covered brand-name drugs is 55%, and the discount on generics is 35%.

How do you get out of the doughnut hole? In 2015, you get out of the doughnut hole and into the fourth coverage period (catastrophic coverage) when you have spent $4,700 out-of-pocket on drugs since the beginning of the year. This amount includes what you have paid out-of-pocket, but it doesn't include your premium or anything that your plan paid towards your drugs. It does include your deductible, your co-pays, and what you pay while you're in the gap; including the discounts your brand name medication. You get credit for the full cost of the brand name medication.

In 2015, if you reach the catastrophic coverage period, you pay $2.65 for generics and $6.60 for all other drugs.


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