The Part D Coverage Gap (Donut Hole)
The Part D coverage gap is also referred to as the donut hole. While somewhat confusing, it is important for Part D plan holders to understand how it works because it can greatly impact the out-of-pocket expenses associated with prescription drug coverage.
What is the Coverage Gap
The coverage gap is part of every Part D plan. Put simply, it is a “gap” in prescription drug coverage where the member will pay more for prescription drugs.
How Does the Coverage Gap Work?
Once Medicare beneficiaries reach the plan’s initial coverage limit and their total prescription drug costs reach $4,430, they will enter the coverage gap, also known as the “donut hole”. During this time, they will receive a 75% discount on name-brand drugs and a 63% discount on generic medications. However, the member’s out-of-pocket expenses will be higher than before they entered the coverage gap. The coverage gap will continue until the member has paid $7,050 for prescription drugs. After that, the catastrophic coverage phase begins, during which the member is responsible for only 5% of the prescription cost until the end of the year.
Prescription drug costs that count towards the coverage gap include the yearly deductible, coinsurance, copayments, and the discount received on brand-name drugs. Conversely, drug plan premiums, pharmacy dispensing fees, and the amount paid for drugs not covered do not count towards the coverage gap. It is important for beneficiaries to review their coverage every year to ensure they are receiving the most coverage for the best price. Our licensed agents can help with this review process.
Tips to Avoid the Medicare Part D Coverage Gap
The coverage gap, also known as the donut hole, is sometimes unavoidable. However, there are ways to prevent or delay reaching the gap.
One approach is to have your drug plan reviewed annually to ensure that it is still the best fit for your medication needs. Even if your drugs haven’t changed, your plan’s formulary and costs may have.
Another way to avoid the coverage gap is by opting for generic medications when possible. Using generics can help stretch your initial coverage limit.
You can also compare prescription drug prices at various pharmacies. Many drug plans have a preferred pharmacy list, which typically offers lower prices. Using one of these preferred pharmacies can reduce your out-of-pocket expenses.
Another cost-saving option is to consider mail-order medications or online ordering. Often, these options come with a discount.
Contacting the drug manufacturer directly for a discount or coupon is another possibility. Many manufacturers provide discounts upon request.
Finally, you can apply for the Extra Help program, which provides financial assistance for Part D premiums, deductibles, and copays.
Part D Straddle Claims
A Part D straddle claim is when a medication “straddles” two coverage phases, such as when the cost of a medication exceeds the remaining funds in the initial coverage phase and moves the beneficiary into the donut hole. In such cases, it is unclear how much the individual will be required to pay. To resolve this, the plan calculates the beneficiary’s responsibility using the dispensing fee and coverage gap discount for the prescription.
Medicare Advantage Drug Plans & the Coverage Gap
Medicare Advantage (Part C) plans that come with prescription drug coverage still have the coverage gap, but they may provide coverage for some generic drugs during this phase. However, the payments made for these generic drugs will not count towards the out-of-pocket expense that is required to get out of the coverage gap and qualify for catastrophic coverage.
Coverage Gap Prescription Assistance
The Extra Help program is available to individuals who meet certain income and eligibility criteria and is offered through each state. It can help cover some or all of an individual’s prescription expenses during the coverage gap. If the individual is not eligible for Extra Help, they can discuss with their healthcare provider the possibility of switching to less expensive medications. It is important to determine with your doctor whether the alternative medication is just as effective for your condition.
Help with the Coverage Gap
Understanding the donut hole can be challenging, and we receive many inquiries about it. To assist you with all your Medicare-related queries, our licensed agents are available.
Whether or not you have landed in the coverage gap, it’s crucial to have your drug plan reviewed regularly. As plans change every year, we want to ensure that you are enrolled in the most suitable plan that helps you prevent reaching the coverage gap.