As each year progresses, many retirees with high medication expenses worry about entering the Medicare Part D Donut Hole.
What is the Donut Hole?
The formal term for this period is called the “coverage gap.” It was originally called the donut hole or coverage gap because it refers to a gap in Medicare Part D prescription coverage. When Medicare beneficiaries reach this gap, their out-of-pocket cost responsibility increases.
In 2020, individuals will enter the donut hole once the value of their covered prescriptions has reached $4,021.
Prior to 2011, those who reached the donut hole were required to pay the total cost for their prescriptions out-of-pocket for the remainder of the year or until they reached the catastrophic coverage threshold. Since 2011, pharmaceutical manufacturer discounts and favorable changes in legislation have gradually caused a decrease in the financial responsibility of the individual.
The Donut Hole Closes
You may have heard that the donut hole is closing. The reality is that the donut hole is not going away, but the cost share for those with Part D coverage is continuing to lessen significantly. When experts reference the donut hole closure, they are referring to the point that the maximum level of projected benefits expected from government and manufacturer discounts will be reached based on federal legislation.
While the Part D donut hole was previously estimated to “close” in 2020, the coverage gap end date for brand-name medications was moved up to 2019. In 2020, covered generic and brand-name medications are discounted by 75 percent.
Most retirees who enter the coverage gap will never spend enough to reach the next phase, which is known as catastrophic coverage. Instead, they will pay their coinsurance of 25 percent for covered generics and covered brand-name medications through the end of the year and then restart their medication coverage at the beginning of the next year. For those who reach the catastrophic stage, medication costs drop significantly, and these individuals pay a very low coinsurance or copayment.
What to Do if You Hit the Donut Hole
Unfortunately, switching Medicare plans will not help you avoid hitting the Donut Hole. If you find yourself in the donut hole, it may be time to talk with your doctor about other prescription medication options. In many cases, he or she may be able to prescribe other generic medications. To avoid risking your health, do not skip, stretch or stop taking your medications without consulting your doctor first.