Closing the Doughnut Hole

Medicare prescription drug coverage can be tricky to understand.  Part D of Medicare covers drugs for seniors who already have Medicare at an additional monthly premium. Still, the doughnut hole coverage gap forces seniors to pay out of pocket once their drug costs hit a certain amount. Recent health care reforms have focused on the doughnut hall as a way to cut costs. Here are the top 6 things to know about the doughnut hole for seniors, their relatives, and their friends.

The president will be using these to close your coverage gap.

The president will be using these to close your coverage gap.

1.)    The phrase “doughnut hole,” or “donut hole” if you prefer Dunkin Donuts to your average breakfast fare, refers to the coverage gap for seniors on Medicare prescription drug plans. After a prescription drug plan (PDP) pays a certain amount of cash for a beneficiary’s medication, the beneficiary is then responsible for paying out of pocket until they reach spending that requires catastrophic coverage, after which the plan will help cover prescriptions for the rest of the year.

2.)    There are tools  that can help you avoid the doughnut hole. Type in the specifics about the drugs you need to generate a report for the year that will tell you if you are likely to hit the gap. If you are deemed likely to hit the gap, the calculator can show you alternatives that can reduce costs. It isn’t an instant cure-all, but knowing your needs can work wonders in closing your personal doughnut hole.

3.)    Some prescription drug plans cover generics within the gap, but often come with more expensive premiums. Remember, not all plans cover generics in the gap, so it’s crucial to understand what exactly your PDP or Medicare Advantage page covers.

4.)    In early June, the Department of Health and Human Sources sent out $250 doughnut hole rebates to seniors who fall into the coverage gap.  You’ll receive the checks automatically after you enter the doughnut hole, but keep record of prescription medication as backup just in case you don’t receive your rebate for some reason.

5.)    Scammers are preying beneficiaries who receive doughnut hole checks—which I like to think of as Munchkins. Remember, you don’t need to get your money through a third party, and you don’t have to tell anyone any personal information to receive a check. The Consumer Reports Money blog has a great overview of these scams. Help yourself or a loved one avoid fraud.

6.)    By 2020, the government hopes to close the doughnut hole completely. In 2011, the government will begin providing drug discounts to beneficiaries enrolled in Part D plans. Discounts will increase until 2020, when the doughnut hole will look more like a Boston cream doughnut than a regular ring doughnut.

While prescription drug plans can sometimes control costs, the wide expanse of the doughnut hole can really put a hurting on your wallet. Hopefully health care reforms will truly eliminate the coverage gap for seniors. Until then, the government will be taking baby steps to reduce drug costs for people with Medicare.


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