Most Medicare drug plans have a temporary limit on what they will cover for prescription drugs. This limit is known as a “coverage gap” or “donut hole.” Once Medicare patients reach their plan’s initial coverage limit, they will be responsible for paying all of their drug costs until they reach a certain out-of-pocket amount, when their insurance once again kicks in. Every drug plan is required to explain the coverage gap, but many consumers are surprised when their coverage vanishes and they are required to pay 100% of drug costs. Recently passed health care reform legislation closes the hole over the next ten years.
Typically, Medicare patients are covered for drug costs of up to $2,830 in 2010 (once they pay a deductible, if their plan has one). Upon reaching that limit, many patients are shocked to find they are required to pay 100% of the cost of their prescription drugs until their total out-of-pocket cost reaches $4,550. It is important to note that the coverage gap typically does not apply to patients with limited income and resources and those who qualify for extra help with their prescription drug costs. These individuals will continue to pay the same copayment or coinsurance amounts during the coverage gap.
How the Coverage Gap Works
How Health Care Reform Affects the Donut Hole
The health care reform bill closes the Medicare Part D "donut hole" over the next ten years (2010-2020). Patients who hit the donut hole in 2010 will receive a one-time $250 rebate. Beginning January 1, 2011, patients will also automatically receive a 50% discount off the negotiated price for brand-name prescription drugs that are covered under Part D.
The donut hole is unique to Medicare Part D, further confusing many seniors. Most do not even know their plan has a coverage gap until they fall into it. If you have questions, please contact your trusted local community pharmacist.
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