Closing the Dreaded Donut Hole

Healthcare Policy Expert, Robin Scott, is a contributing blogger for Protestants for the Common Good. 

You have probably heard about the dreaded donut hole.  That refers to a problem that affects people receiving Medicare health coverage, even those who have also enrolled in Medicare Part D Prescription Drug Plans.  As everyone knows, prescription medicines are expensive, especially if you have a chronic illness.  I have heard stories of people skipping doses, sharing medicine with spouses, and skipping medicine altogether because of price.  

For Medicare beneficiaries, you have the option of purchasing a Medicare Part D Prescription Drug Plan.  Initially, you may have to pay a deductible of a little more than $300 and an average of 25% of the cost of your medication until you reach the $2,930 drug coverage limit. (The dollar amount to reach the $2,930 coverage limit includes what you pay and what the plan pays.) Then you hit a coverage gap or donut hole where the costs of your co-payments increase until you reach catastrophic coverage.  Then you pay 5% or $2.60 for generics and $6.50 for brand-names whichever is greater. 

 

Before health reform (or the Affordable Care Act), you would have had to pay 100% of out-of-pocket costs before getting out of the donut hole. (The donut hole for 2012 was $2,930 to $6,658.) See illustrations for 2012 and 2013 respectively at: http://familiesusa2.org/assets/pdfs/medicare-part-d/Prescription-Drug-Benefit-Illustration-2012.pdf  and  http://familiesusa2.org/assets/pdfs/medicare-part-d/Prescription-Drug-Benefit-Illustration-2013.pdf.  Not surprisingly, it was difficult for people to pay the costs of medicine during the donut hole so many of them never even reached catastrophic drug coverage.  Some beneficiaries stopped filling their prescriptions and others never reached the dollar amount in drugs to get out of the donut hole.

But thanks to health reform, in 2012, beneficiaries receive an automatic 50% discount on brand-name drugs and 14% discount on generics while in the donut hole. The brand name and generic drug discounts gradually increase every year until 2020 when the donut hole is phased out.  Then you will once again pay an average of 25% of the cost of your medication until you reach catastrophic coverage.

In the first four months of 2012 alone, more than 416,000 people have saved $301.5 million – an average of $724 a person so far this year.   The Affordable Care Act was helping them even before that.  After the Affordable Care Act passed in 2010, those who hit the donut hole received a $250 rebate – with almost 4 million seniors and people with disabilities receiving a collective $1 billion.  In 2011, Medicare beneficiaries received more than $2.1 billion in savings – averaging $604 per person last year – from the 50% discount on brand-name drugs in the donut hole.  http://www.healthcare.gov/blog/2012/05/medicare052412.html (There was also a 7% subsidy for generic drugs purchased in the donut hole in 2011.)

For Medicare beneficiaries, it is the Annual Open Enrollment period for 2013.  It started October 15 and ends on December 7.  If you already have a Part D plan, you should check to make sure that your current plans continues to work for you in 2013 (for example, make sure that all drugs that you take are on the formulary and check premiums and co-payments and co-insurance).  General information about Medicare Part D Prescription Drug Coverage can be found at: http://www.medicare.gov/part-d/index.html

·         (This blog does not refer to people who get “extra help” or the low-income subsidy.)