Medicare Part D’s “Donut Hole” Coverage Gap

Medicare Part D’s “Donut Hole” Coverage Gap
By Yvonne Tepsick

To help Medicare users to handle the high cost of medications, Medicare offers prescription drug coverage, run by insurance companies or other companies that have been approved by Medicare. The plans these companies offer help you afford prescription drugs that you need for the treatment of illnesses or permanent medical conditions.

Some of the Medicare prescriptions plans may have a deductible of $405 in 2018. If your plan does have a deductible, you could pay the first $405 of your tier 3, 4 or 5 drugs. Once the deductible is met, it acts like any other plan that doesn’t have a deductible. This is called the initial coverage stage.

Depending upon the amount you pay for drugs covered under your Part D plan, you may experience a temporary coverage limit, also known as the “donut hole”. In 2018, this gap starts after the cost of your medications to the insurance company reaches $3,750 on covered drugs and Catastrophic Coverage begins after you have paid $5,000 for your covered drugs.

After you reach the “donut hole,” you’ll pay more of the drug costs from your own pocket. For brand-name prescription drugs, you may pay 15% of your plan’s cost and 44% for generic drugs.

The Coverage Gap Doesn’t Affect Everyone

Some Medicare recipients may not experience the coverage gap. Healthier individuals or people who purchase generic drugs may not spend up to $3,750 on prescription drugs, while others may have Extra Help. Extra Help is a specialized federal program that helps people living on a limited income.

If you qualify, Extra Help eases the costs of coverage. “Full” Extra Help provides you with insurance coverage throughout the year (with no gap) and you’ll pay much less for prescriptions. “Partial” Extra Help offers coverage through the year, as well as a reduced deductible and premium. Partial Extra Help will also pay up to 15% of the cost of your prescription drugs.

How To Leave The Coverage Gap

What you pay in out-of-pocket costs will help you eventually exit the coverage gap. While you’re in the “donut hole,” Medicare has a predetermined limit to what you pay from your own wallet. Medicare not only notes what you’re paying for prescription drugs but also counts your yearly deductible, your co-insurance and your co-payments toward this out-of-pocket limit.

Also, catastrophic coverage begins automatically when you reach the out-of-pocket limit of $5,000 during the coverage gap. When catastrophic coverage is in effect, you have a smaller amount to pay in co-insurance or co-payments for the remaining months of the year.

Open Enrollment Has Started

If you want more information about the “donut hole” coverage gap or you’d like to change to a different Medicare plan, open enrollment is a good time. Please make an appointment by calling 352-350-6663. As an independent insurance agent, I’ll help you to examine your current coverage and find a good plan for your health needs.

© 2017, Charles Montgomery. All rights reserved.

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