What you need to know about the "Donut Hole"
by: Ciarra Dobbs
Quite often when I sit with my clients regarding their current #Medicare plan or their transition to #Medicare, the most confusion surrounds the prescription drug plan, more specifically, the Donut Hole. The initial creation of the "Donut Hole" had the intentions of helping keep costs low by encouraging generic drugs, but the folks who require name brand drugs can end up paying a lot of money out of pocket if they fall into the coverage gap.
The true definition of "Donut Hole" is "Most plans with Medicare prescription drug (Part D) have a coverage gap (called a "donut hole"). This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit."*
Essentially, the #Donut Hole was originally created to encourage people to opt for generic rather than name brand drugs when that option was possible so that hitting the set amount for that year for the coverage gap was not as likely. The idea of it was to keep the cost of prescription drugs down for both Medicare beneficiaries and the insurance companies providing coverage.
The Donut Hole is closing in 2019
For 2018, once $3,750 is spent by the beneficiary and the company, beneficiaries become responsible for 35% of out-of-pocket costs for all name brand drugs and 44% for generic drugs. Then, once $5,000 is reached, the beneficiary enters what's called catastrophic coverage and are then only required to pay 5% of these costs.
The original concept of the Donut Hole had good intentions, however since it's creation, one of the biggest issues that arise is the fact that with certain illnesses or diseases that require name brand drugs because they are better in helping fight or treat these certain illnesses or diseases. The cost of name brand drugs are obviously much higher causing the beneficiaries to hit the Donut Hole quicker in the year, resulting in high annual costs.
Simply, there are many people who can't afford the name brand drugs they need or the high costs of being in the Donut Hole. In 2019,under the Bipartisan Budget Act of 2018, the Donut Hole will be permanently closing. Part D plans will continue to pay 75% of all drug expenses up until the annual limit but the big difference is that beneficiaries will now only be required to pay 25% of their prescription drug cost. From the time they enter their gap until they reach catastrophic coverage, their responsibility will be 25% of cost. This decrease in responsibility of the beneficiary does result in an increase in responsibility of the drug manufacturers by about 50-70% according to AARP.**
If you have questions about how this will directly impact your situation, please call us! We would be happy to answer any questions to you have.
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