What do donuts have to do with Medicare?

11 Sep What do donuts have to do with Medicare?

Posted at 10:00h in Health Insurance by Triage Cancer

Before the Affordable Care Act, people with Medicare Part D coverage, often fell into a coverage gap, where they would have to pay thousands of dollars out of their own pocket to get the prescriptions drugs they need.

A standard Medicare Part D plan works like this, in 2014:

You pay a $310 deductible, meaning that you pay for the first $310 of your prescription drug costs
Then Medicare pays 75% of your prescription drugs costs and you pay 25%, until you reach $2,850 in out-of-pocket costs
Then you fall into the donut hole, until you reach $4,550 in total out-of-pocket costs
After that, Medicare kicks back in and pays 95% of your prescription drug costs and you pay 5%

This coverage gap is known as the “donut hole.” Far from the doughy, sugary-ball of goodness we all remember from days of frequenting the neighborhood donut shop, this deep-fried metaphor is forcing seniors and people with disabilities with Medicare to pay astronomical prices out of pocket for their medications. As a result of the ACA, this gap is closing, making prescription drugs more affordable, and improving care.

How much have people on Medicare saved?

According to the U.S. Department of Health and Human Services, more than 8.2 million people have saved over $11.5 billion on prescription drugs since 2010, for an average of $1,407 per person.

So, the question remains, when and how will the donut hole close?

In 2010, anyone with a Medicare Part D plan who reached the donut hole received a $250 rebate.
In 2011, people who were stuck in the donut hole began receiving discounts on covered brand-name drugs and generic drugs.
In 2014, Medicare will cover 52.5% of brand name drugs and 72% of generic drugs while people are in the donut hole.
All and all, Medicare Part D coverage will gradually increase between now and 2020, when (much to the dismay of those who cling to the nostalgic memory of the doughy, sugar-coated ball of goodness) the donut hole will be closed entirely. (see the chart below)

DH Chart

As we approach open enrollment periods, the Affordable Care Act is helping more people get the medication they need, when they need it, without breaking the bank. But don’t worry; the donut shop is still on the corner.

For state-by-state information on discounts in the donut hole, please visit: http://downloads.cms.gov/files/Medicare-Part-D-Donut-Hole-Savings-Summary-2010-June-2014.pdf.

For more information about Medicare prescription drug benefits, please visit: www.medicare.gov/part-d.