What is the Donut Hole???
I am frequently asked 3 questions about a mysterious and misunderstood segment of Medicare Prescription Drug (Part D) coverage:
1. What is the Donut Hole?
2. How do I get in the Donut Hole??
3. How do I get out of the Donut Hole???
Whether your Medicare Prescription Drug Coverage is a “stand alone” Prescription Drug Plan or included in your Medicare Advantage Plan, it has the dreaded Donut Hole.
What is the Donut Hole? Technically it is the “Coverage Gap” in Medicare, just one segment of the 4 Part D Coverage stages:
• Deductible: If your plan has a deductible, you will pay the “Full Cost” of the drug until you meet the annual deductible, though some plans exclude some “tiers” from deductible.
• Initial Coverage: After the deductible has been met, you generally have fixed amounts to pay for your drugs—Co-pays or Co-insurance (percentage of the cost)
• Coverage Gap (Donut Hole)
• Catastrophic Coverage
How Do I Get IN the Donut Hole??
Part D Prescription Drug Coverage works on a calendar year basis, January 1st through December 31st. As you fill prescriptions throughout the year, your plan is keeping track of the “Full Cost” of your drugs. For example you may pay $3, $20 and $47 dollars for three different drugs that actually cost $11.55, $66.23 and $454.81 dollars.
If the FULL COST of your drugs added together in the calendar year reach a certain threshold, (which changes each year), it is $3750.00 in 2018…YOU ARE IN THE DONUT HOLE!!
All Plans have the Donut Hole, and what you pay for drugs changes to a percentage of the “Full Cost” your Part D Plan has for your prescriptions. In 2018 the costs are 44% on Generic drugs and 35% of Brand drugs. (the percentages change each year)
How Do I Get OUT of the Donut Hole???
Stay with me here! Your “True Out Of Pocket” (TROOP) costs must reach $5000.00 in 2018. The 5000 really has nothing to do with the 3750, it is 2 different calculations! The TROOP of 5000 is reached by adding up what YOU actually paid initially, this includes deductible if any, then co-pays/co-insurances in Initial Coverage plus the 44% on generics/35% on brands in the Donut Hole, AND the drug manufacturer of your Brand name drugs contributes 50% of the cost of the Brand drug. If this adds up 5000, then…YOU ARE OUT OF THE DONUT HOLE!!!
Now you are in Catastrophic Coverage. Costs generally go down. For 2018, you will pay the greater of 5% of the full cost of your drugs, or $3.35 for generics, $8.35 for brands. This will continue to the end of the year, and it starts all over again from the beginning on January 1st!
Pretty easy, right? LOL!