In order to understand the permutations of Medicare Part D, you must have a Lewis Carroll like sense of the absurd and a gift for games of logic and language.Hopefully this blog will give you the keys to unlock the mysterious door to this provision and help you determine when you will go into the hole and when you will come out of the hole.
What is Medicare Part D?
Medicare offers prescription drug coverage for everyone with Medicare. This is called “Part D.” This coverage may help lower prescription drug costs and help protect against higher costs in the future. It can give you greater access to drugs that you can use to prevent complications of diseases and stay well.
If you join a Medicare prescription drug plan, you pay a monthly premium. Part D is optional. If you decide not to enroll in a Medicare drug plan when you are first eligible, you may have to pay a penalty if you choose to join later.
There are two ways to get Medicare prescription drug coverage. You can either join a Medicare prescription drug plan that adds coverage to the original Medicare plan, or join a Medicare Advantage Health Plan (like an HMO or PPO) that includes prescription drug coverage. You get all of your Medicare health care including prescription drug coverage through these plans.
Medicare Advantage Plans (like HMOs and PPOs) that include prescription drug coverage as part of the plan are health plan options that are approved by Medicare but run by private companies. They are part of the Medicare Program. If you join a Medicare Advantage Plan you are still in Medicare.
What is the donut hole?
The standard Medicare Part D benefit includes an initial $295 deductible. After meeting the deductible the beneficiaries pay 25% of the cost of covered Part D prescription drugs, up to an initial coverage limit of $2,700. Once the initial coverage limit is reached, beneficiaries are subject to another deductible, known as the “Donut Hole,” in which they must pay the full costs of drugs.
When total out-of-pocket expenses on formulary drugs reach $4,350 – including the costs of the deductible and coinsurance, beneficiaries reach the “Catastrophic Coverage” benefit. Beneficiaries entitled to Catastrophic Coverage pay $2.40 for a generic or preferred drug and $6.00 for other drugs, or a flat 5% coinsurance, whichever is greater. This out-of-pocket amount is calculated annually. Beneficiaries who reach the out-of-pocket threshold in one year have to begin to meet it again on January 1st of the next year.
Only certain costs, such as money spent on formulary drugs (or non-formulary drugs that have been granted an exception by the plan), costs paid by the beneficiary’s family, a charity, or a State Pharmaceutical Assistance Program such as ConnPACE, count toward the true out-of-pocket spending requirement.
Costs paid for non-formulary drugs, cost of drugs purchased outside the United States, costs paid for by other insurance, including ADAP plans (CADAP in Connecticut), and Premiums paid to the Part D plan, do not count towards the requirement.
Do Medicare Prescription Drug Plans have Doughnut holes?
Each state offers at least one plan with some type of coverage during the coverage gap or donut hole. However, plans with gap coverage may charge a higher monthly premium so as to provide more coverage during the gap which occurs in many plans. Some plans may only offer generic drug coverage during the gap.
Tip: On your monthly statements from your Medicare Part D provider, follow the cost of your prescription, amount paid by your plan, amount paid by you.
Resources: http://www.medicareadvocacy.org/PartD_DoughnutHole.htm
“Find & Compare Plans that Cover Drugs” [Medicare]
