Some Enrollees Are Hitting The Medicare Doughnut Hole
Some Medicare D prescription drug plans have a coverage gap, also referred to as a "doughnut hole". Various Medicare D prescription drug plans have left many enrollees not fully realizing the impact of the Medicare doughnut hole. Some enrollees are reportedly just finding out about the Medicare doughnut hole at their pharmacy when their co-pay surges from what they paid the previous month.
In the first round of Medicare Part D sign-ups, some states offered more than 40 different plans from which to choose. Medicare representatives and a Medicare Prescription Drug Plan Finder on the Medicare.gov website attempted to help enrollees decide which plan was best for their needs. Even so, many enrollees ended up not fully understanding how their plan would work.
Many enrollees are shocked when they hit the Medicare doughnut hole (or gap in coverage) and are unsure how they got in the hole or when they will come out of it. Medicare Part D providers are required to mail monthly statements so enrollees can follow along. It is difficult to grasp even with a monthly statement unless you completely understand how your plan works.
What Is The Medicare Doughnut Hole?
Medicare Part D enrollees pay a co-payment amount for their prescription drugs as determined by their specific plan. For standard plans, enrollees pay their co-payment until their total drug cost reaches $2250. In the initial coverage phase, the enrollee pays a co-pay amount and the drug plan pays the rest of a discounted drug price. The total drug cost is the co-pay amount paid by the enrollee plus the amount paid by the Medicare Part D drug plan.
After $2250 in total drug costs is reached, there is a gap in coverage (the "doughnut hole") and the enrollee must pay the full cost for their prescription drugs until they have paid $3600 out-of-pocket expense. (It has been erroneously reported that the $3600 out-of-pocket expense is in addition to what has been paid out-of-pocket towards the initial $2250. Actually, what has been paid out-of-pocket during the initial coverage phase also counts towards the $3600.)
After total true out-of-pocket (TrOOP) expense equals $3600, enrollees reach "catastrophic coverage" and their cost per drug drops to a small co-pay (usually $2 or $5) or 5% co-insurance, whichever is greater. During the period enrollees are in the coverage gap or doughnut hole, they must still pay their monthly premium.
Do All Plans Have A Doughnut Hole?
Some plans charged a higher monthly premium so as to provide more coverage during the gap which occurs in many plans. When deciding which Medicare Part D prescription drug plan to choose, enrollees have to consider:
How Does Medicare Explain The Doughnut Hole?
"If you have high drug costs, you may consider which plans offer additional coverage until you spend $3,600 out-of-pocket. In some plans, if your costs reach an initial coverage limit, then you pay 100% of your prescription costs. This is called the coverage gap. This "gap" in coverage is generally above $2,250 in total drug costs until you spend $3,600 out-of-pocket. Some plans might offer some coverage during the gap. Even in plans where you pay 100% of covered drug costs after a certain limit, you would still pay less for your prescriptions than you would without this drug coverage", according to Medicare.gov.
Points To Remember
Related Resources
Sources: Medicare Prescription Drug Coverage, medicare.gov; AARP Medicare Rx Plan Handbook, 2006; Medicare doughnut has $3600 hole, Tony Pugh, May 31,2006, kansascity.com
