Medicare Part D Supplemental Insurance and the Medicare Doughnut Hole
Question: What is the Medicare doughnut hole?
Answer: The Medicare doughnut hole refers to a gap in coverage experienced by seniors who are enrolled in Medicare Part A and Part B, and who purchase Medicare Part D supplemental insurance for prescription drug benefits.
Those who purchase the supplemental insurance must pay a $310 deductible before prescription drug benefits kick in. At that point, beneficiaries pay for 25% of drug costs. The doughnut hole occurs when there is a difference between the initial coverage limit for prescription drugs, $2,830 annually, and the catastrophic coverage threshold. Once the initial coverage benefit has been surpassed, seniors must then pay the full price of medications until an additional $3,610 has been spent. Catastrophic coverage then kicks in and participants then pay 5% of the cost of their medications.
Does the Health Care Bill Address the Doughnut Hole?
Yes, but the changes are set to take place over a number of years:
Beginning in 2010, beneficiaries who enter the doughnut hole receive a $250 check
In January 2011, beneficiaries in the coverage gap get 50% off brand-name drugs
Starting in 2013 the federal government begins giving seniors who hit the coverage gap subsidies for brand-name drugs. The subsidies begin at 2.5% of the cost of the prescriptions, but subsidies gradually increase to 25% in 2020. By 2020, discounts and subsidies should cover 75% of brand-name drug costs
Generic drugs are also addressed in the health care reform bill. In 2011 government subsidies cover 7% of generic drug costs, and by 2020 phased-in increases should cover 75% of generic drug costs
Is Congress Still Looking at the Doughnut Hole?
According to published reports, Congress is looking at ways to shorten the timeframes and provide relief to seniors before 2020.