What is the Medicare Donut Hole?
The Coverage Gap, or Donut Hole, is one of the most confusing parts of Medicare, and when overlooked, can leave you responsible for out of pocket expenses, that you may not be anticipating.
Here is brief overview of the Coverage Gap (also known as The Donut Hole), based on the 2016 Medicare Standard Benefit Plan Model.
- The Donut Hole phase of your Medicare Part D coverage, begins when your total retail drug costs reach $3,310.
- The $3,310 is the total retail cost of the covered medications and does not include what you spend personally at the pharmacy.
- As a Medicare Part D beneficiary, you are only responsible for paying a portion of the $3,310, and your Part D plan will also pay a portion.
- The total cost of prescription meds, is determined by your specific Part D plan’s negotiated rate. These vary among plans, so be sure to ask your agent when enrolling in a Part D prescription drug plan.
- Using the CMS (Center for Medicare and Medicaid Services) model Medicare Part D plan, a beneficiary will pay the first $360 as an initial deductible and then must pay 25% of the next $2,950 (which comes to $1,097.50), excluding monthly premiums.
- Using the same model, when you reach the Donut Hole, your Medicare Part D coverage will pay the difference between the negotiated retail cost of your drugs and your out of pocket costs ($2,212.50).
- Put simply, you enter the Donut Hole phase of Medicare Part D plan, when your initial coverage ends, or when you reach your Medicare Part D initial coverage limit, which is typically around $3,310.
- In 2016, anyone who falls in The Donut Hole/reaches The Coverage Gap, will receive a 55% discount on brand-name formulary drugs, and a 42% discount on generic medications.
- You stay in The Donut Hole until your True Out-of-Pocket (TrOOP) costs reach $4,850.
We understand that The Donut Hole can be confusing and overwhelming so it’s always best to speak with a licensed agent to get a better understanding of how to avoid The Coverage Gap. Speak with an experienced agent at Plan Medicare to learn more today.