What is the Donut Hole?

Answers Provided by a Medigap Plan Representative

First, here’s a little background.

In 2003 the federal government enacted the Medicare Prescription Drug, Improvement, and Modernization Act so that Medicare recipients could participate in federal subsidies to lower their prescription drugs costs. As a result, Medicare prescription drug plans (or Medicare Part D plans) pay some of the costs for prescription drugs purchased at participating pharmacies.

Everyone enrolled in Medicare Part A or Medicare Part B is eligible for Part D coverage, regardless of income and resources, health status, or current prescription drug expenses. The program is voluntary and can be especially helpful for people who have high prescription drug costs and no current prescription drug coverage. As with Medicare Part B, there are monthly premiums, deductibles, and co-payments.

The initial coverage period begins after your deductible is met. During this initial coverage phase, you pay a co-payment or coinsurance, and your prescription drug plan pays its share for each covered drug until the combined amount (including the deductible) reaches $2,930.

Once you and your Medicare prescription drug plan have reached the combined $2,930 threshold, you’ll be in the Donut Hole (or Coverage Gap) period. During this period you normally have to pay prescription drug costs out-of-pocket, although the Affordable Care Act provides seniors a 50% discount on covered brand name Medicare-approved medications. The donut hole phase continues until your total out-of-pocket costs, including your yearly deductible, co-payment, and coinsurance amounts, reach $4,700.

Although the donut hole stage is scheduled to be phased out by 2020, eight years can seem an eternity especially to those with lower or fixed incomes. While the catastrophic coverage stage follows once a senior’s out-of-pocket drug costs reach $4,700, the fact is that most seniors don’t reach the level where catastrophic coverage kicks in. And, sadly, many simply stop taking their prescribed drugs upon entering the donut hole.

Not everyone will reach the donut hole or coverage gap phase, but why gamble with your health? There’s Medicare supplement insurance designed to help you rest easy, and MedicareMall is here to help you sort through the options and come up with the prescription drug plan or Medigap plan that’s best for you. Contact MedicareMall now and we’ll make sure you’ve got the Medigap policy you need at a price you can afford.