As each year progresses, many retirees with high drug 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, which marks the end of their initial coverage, their out-of-pocket cost responsibility increases.
In 2019, individuals will enter the donut hole once the value of their covered prescriptions has reached $3,820.
Prior to 2011, those who reached a certain threshold in prescription costs for the year were required to pay the total cost for their prescriptions out-of-pocket for the remainder of the year. After 2011, government subsidies and pharmaceutical manufacturer discounts were applied to expenses incurred in the donut hole, progressively lessening the financial responsibility of the individual.
The Donut Hole Closes in 2019
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 lessening 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 achieved 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 drugs has been moved up to 2019. In 2019, covered generic drugs are discounted by 63 percent and covered brand-name drugs 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 37 percent for covered generics and 25 percent for covered brand-name drugs through the end of the year and then restart their drug coverage at the beginning of the next year. For those who reach the catastrophic stage, drug 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 drug 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.