The Medicare Part D Donut Hole: Going…Going…Not Quite Gone
Posted by Medicare Made Clear
The prescription drug donut hole is a gap in Medicare Part D’s prescription drug coverage.
Once you and your Medicare Part D plan have spent a certain amount on covered prescription drugs during a calendar year ($3,310 in 2016), you reach the coverage gap. You are now in the Part D donut hole.
You pay a larger percentage of your prescription drug costs while you’re in the donut hole until another dollar limit ($7,062.50 in 2016) is reached. Then Medicare Part D coverage kicks in again.
Closing the Part D Donut Hole
The good news is the donut hole isn’t as big as it used to be. When Medicare Part D launched in 2006, Medicare beneficiaries had to pay 100% of their prescription drug costs during this gap in coverage. With the passage of the Affordable Care Act, that percentage started to drop.
In 2016, you pay 45% of the cost of brand-name prescription drugs and 58% for generics while in the donut hole. These percentages are scheduled to decrease every year, bottoming out at 25% for both brand-name and generic drugs in 2020.
This will effectively close the donut hole, putting costs on par with what you pay between the time you meet your deductible (if you have one) and when you hit your out-of-pocket spending limit.
Getting Into and Out Of the Donut Hole
It’s important to note that it’s not just your share of your prescription drug costs that get you into and out of the donut hole. The amount your plan pays also counts towards the first milestone that puts you into the donut hole.
Drug companies may help pay your way, too. They provide a 50% discount on brand-name drugs purchased while in the donut hole.
The drug company discount counts toward the second dollar limit, the one that marks the end of your passage through the coverage gap. For generic drugs, only the amount you pay out-of-pocket applies to your spending limit.
Conclusion
This will all get simpler in 2020 when the donut hole closes. Until then, following these tips may help you climb out of it more quickly – or keep you from falling into it in the first place:
- Stick with your plan’s formulary whenever possible. Only medications on the formulary, or for which you get an approved exception from the plan, count toward your spending limit.
- Make sure to get your drugs from a network pharmacy. Prescriptions you fill outside your network pharmacy don’t apply to your spending limit.
- Opt for generics if your doctor thinks they’re appropriate. The lower costs for generics may be enough to keep you from slipping into the donut hole.
