The term “donut hole” refers to the point at which a drug plan’s coverage for medications reaches its limit. When you and your Medicare Part D
Medicare Part D
Medicare Part D, also called the Medicare prescription drug benefit, is an optional United States federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs through prescription drug insurance premiums. Part D was originally propo…
What does the donut hole mean with Medicare?
The donut hole is a gap in prescription drug coverage during which you may pay more for prescription drugs. You enter the donut hole once your Medicare Part D plan has paid a certain amount toward your prescription drugs in 1 coverage year.
Can you avoid falling into the Medicare Donut Hole?
This is a temporary limit on what the Medicare Part D prescription drug plan will pay for your prescriptions. The main way to not hit the coverage gap is to keep your prescription drug costs low so you don’t reach the annual coverage gap threshold. This is also called the initial coverage limit.
Is there still a donut hole in Medicare?
The Medicare donut hole is a colloquial term that describes a gap in coverage for prescription drugs in Medicare Part D. For 2020, Medicare are making some changes that help to close the donut hole more than ever before. Medicare Part D is the portion of Medicare that helps a person pay for prescription drugs.
How do you explain the donut hole?
- However, most people simply say that you enter the Donut Hole phase of your Medicare Part D plan at the end of your Initial Coverage phase or when your reach ...
- With changes in the Medicare law, a $250 Donut Hole Rebate program was implemented in 2010. ...
- The 2011 Donut Hole marked the beginning of an effort at closing the Donut Hole. ...
How does the donut hole work in 2021?
For 2021, the coverage gap begins when the total amount your plan has paid for your drugs reaches $4,130 (up from $4,020 in 2020). At that point, you're in the doughnut hole, where you'll now receive a 75% discount on both brand-name and generic drugs.
How long do you stay in the donut hole with Medicare?
When does the Medicare Donut Hole End? The donut hole ends when you reach the catastrophic coverage limit for the year. In 2022, the donut hole will end when you and your plan reach $7,050 out-of-pocket in one calendar year.
How does a Medicare recipient get out of the donut hole?
In 2020, person can get out of the Medicare donut hole by meeting their $6,350 out-of-pocket expense requirement. However, there are ways to receive assistance for funding prescription drugs, especially if a person meets certain low income requirements.
Does the Medicare donut hole reset every year?
Your Medicare Part D prescription drug plan coverage starts again each year — and along with your new coverage, your Donut Hole or Coverage Gap begins again each plan year. For example, your 2021 Donut Hole or Coverage Gap ends on December 31, 2021 (at midnight) along with your 2021 Medicare Part D plan coverage.
Can you avoid the donut hole?
If you have limited income and resources, you may want to see if you qualify to receive Medicare's Extra Help/Part D Low-Income Subsidy. People with Extra Help see significant savings on their drug plans and medications at the pharmacy, and do not fall into the donut hole.
What is the Medicare donut hole for 2022?
$4,430The Medicare Part D donut hole or coverage gap is the phase of Part D coverage after your initial coverage period. You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit. In 2022, that limit is $4,430.
Will the donut hole ever end?
En español | The Medicare Part D doughnut hole will gradually narrow until it completely closes in 2020. Persons who receive Extra Help in paying for their Part D plan do not pay additional copays, even for prescriptions filled in the doughnut hole.
Does the donut hole go away in 2020?
Key Takeaways. The Part D coverage gap (or "donut hole") officially closed in 2020, but that doesn't mean people won't pay anything once they pass the Initial Coverage Period spending threshold. See what your clients, the drug plans, and government will pay in each spending phase of Part D.
Do all Medicare Part D plans have a donut hole?
All Medicare Part D plans follow the same drug phases. Every prescription coverage plan involves the gap known as the donut hole. Will I enter the donut hole if I receive Extra Help? Those who get Extra Help pay reduced amounts for their prescriptions throughout the year, so they are unlikely to reach the donut hole.
How much is the donut hole for 2022?
$4,430In a nutshell, you enter the donut hole when the total cost of your prescription drugs reaches a predetermined combined cost. In 2022, that cost is $4,430.
Will there be a donut hole in 2022?
In 2022, you'll enter the donut hole when your spending + your plan's spending reaches $4,430. And you leave the donut hole — and enter the catastrophic coverage level — when your spending + manufacturer discounts reach $7,050. Both of these amounts are higher than they were in 2021, and generally increase each year.
What is the best Medicare Part D plan for 2022?
The 5 Best Medicare Part D Providers for 2022Best in Ease of Use: Humana.Best in Broad Information: Blue Cross Blue Shield.Best for Simplicity: Aetna.Best in Number of Medications Covered: Cigna.Best in Education: AARP.
What happens when the donut hole ends in 2020?
The Medicare donut hole is closed in 2020, but you still pay a share of your medication costs. Your coinsurance in the donut hole is lower today than in years past, but you still might pay more for prescription drugs than you do during the initial coverage stage.
How much is the donut hole for 2022?
$4,430In a nutshell, you enter the donut hole when the total cost of your prescription drugs reaches a predetermined combined cost. In 2022, that cost is $4,430.
What are the 4 phases of Part D coverage?
Throughout the year, your prescription drug plan costs may change depending on the coverage stage you are in. If you have a Part D plan, you move through the CMS coverage stages in this order: deductible (if applicable), initial coverage, coverage gap, and catastrophic coverage.
Why is there a donut hole in Medicare Part D?
Why is there a donut hole in Medicare Part D? The donut hole was created to incentivize people to use generic drugs. Thus, keeping beneficiary costs low and reducing Medicare expenses on the program level.
Initial coverage limit
You enter the donut hole after you surpass the initial coverage limit of your Part D plan. The initial coverage limit includes the total (retail) cost of drugs — what both you and your plan pay for your prescriptions.
OOP threshold
This is the amount of OOP money that you have to spend before you exit the donut hole.
Extra Help considerations
Some people enrolled in Medicare qualify for the Medicare Extra Help program based on their income. This program helps people pay for their prescription drug costs.
Generic drugs
For generic drugs, only the amount you actually pay counts toward your OOP threshold. For example:
Brand-name drugs
For brand-name drugs, 95 percent of the total medication price will count towards reaching the OOP threshold. This includes the 25 percent that you pay OOP plus a manufacturer discount.
What happens after I exit the donut hole?
After you exit the donut hole, you’ll receive what’s called catastrophic coverage. This means that you’ll have to pay whatever is greater for the rest of the year: Five percent of a drug’s cost or a small copay.
1. Consider switching to generic drugs
These are often less expensive than brand-name drugs. If you’re taking a brand-name drug, ask your doctor about generic drugs.
What is the Medicare donut hole?
Back to the visual donut image. Picture a donut with a hole in the middle. Maybe it’s an old fashioned style, chocolate glazed, vanilla frosted with sprinkles, apple cider or any other flavor of your choice. Now that we’ve got your attention, let’s continue.
What is the Medicare donut hole for 2021?
The Medicare donut hole for 2021 starts once you hit $4,130 in out-of-pocket prescription drug costs, and it extends to $6,550. If your prescription drug spending reaches $6,550 in 2021, you’ll have catastrophic coverage for the rest of the year.
Did the Medicare donut hole go away in 2020?
No. The Medicare donut hole still exists. However, starting in 2020, instead of being responsible for 37% of the cost of generic prescription drugs and 25% of the cost of brand name prescription drugs while in the donut hole (as was the case in 2019), Medicare beneficiaries only pay 25% for both brand name and generic drugs.
Can I avoid the Medicare donut hole?
The only way to avoid the Medicare donut hole is to prevent your out-of-pocket expenses for prescription drugs from reaching $4,130 in 2021. Once you hit that amount, you enter the Medicare coverage gap.
Do Medicare Advantage plans cover the Medicare donut hole?
Some Medicare Advantage plans may offer extended gap coverage for enrollees in the Medicare donut hole, though you should check with your specific plan for more details.
How much money are we talking about?
The key to handling the coverage gap (donut hole) is to get out of it. That is the goal when you are in it so that you can resume getting help with your prescription drug costs. The amount of money in TrOOP (True out-of-pocket expense), can range from $750 to $3,600.
You Pay up to 45 Percent
Think of the donut hole as a period of time that you are trapped without prescription drug coverage but the way to get out is to continue to purchase your medications at the reduced rate.
How do I know if my insurance has a donut hole or gap in coverage?
It’s safe to say that most Medicare Prescription Drug Plans have a gap in coverage at some time during the year. When you reach this, you will need to have a plan for dealing with the expense.
Will everyone enter the gap period?
One thing to keep in mind, however, is that not everyone will enter the coverage gap. The coverage gap could be considered “upside down deductibles.”
The Good News About the Donut Hole
Despite the fact that you are going to have to pay some serious out-of-pocket expense while you are in the donut hole or Medicare gap, there is good news.
Special Circumstances for Medicare Patients
There are some special situations which will keep some people out of the coverage gap. One of those is that you simply may not take enough medications to reach the coverage gap.
Brand Name and Generic Drugs
One way that you can save additional money when you are in the gap in coverage is to opt for generic drugs in the place of brand name medications. Most people believe that there is no difference in strength or effects of drugs that are purchased in the generic category but some patients prefer to hold out and purchase brand name drugs.
Phase 1 – annual deductible
Some plans require you to pay a deductible, or 100% of the cost of prescription drugs, up to a certain limit before your plan starts to pay. The deductibles vary between plans and some Part D plans have no deductible. In 2021, the deductible can’t be more than $445. Once you hit your deductible, your initial coverage kicks in.
Phase 2 – initial coverage
During this phase, your copayments and coinsurance come into play. You pay just your share of prescription costs and your plan pays the rest for covered drugs. For example, if your plan has a 25% copayment for a $200 prescription, you would pay $50 and your plan would cover the $150 balance.
Phase 3 – coverage gap
Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap, and it doesn’t apply to members who get Extra Help to pay for their Part D costs.
Phase 4 – catastrophic coverage
In this last phase of Part D plan coverage, you’ll only pay a small coinsurance amount or copayment for covered drugs for the rest of the year.
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How Does the Donut Hole Happen?
You will find four stages of Medicare prescription coverage, starting with your deductible and continuing through your catastrophic coverage. Your regular coverage begins after your deductible, and it continues until you reach your out-of-pocket threshold of $4,130. That’s when things get tricky.
What Is My Deductible?
The deductible is the total amount of out-of-pocket expenses you must pay prior to benefits being covered by your plan. This amount varies based on the specific plan you have chosen.
What Is the Initial Coverage Period?
During the initial coverage period, you will pay the stated copayment or coinsurance fees for either brand-name or generic drugs. The exact amounts of these costs are based on your specific plan details and vary depending on your unique plan coverage.
What Is the Coverage Gap?
As mentioned before, the coverage gap is the Medicare term for the more commonly used description of the donut hole. Each year, Medicare sets the limit for out-of-pocket costs that you pay prior to reaching the donut hole.
What Is Catastrophic Coverage?
If your out-of-pocket costs reach a total of $6,550 for the year, you then move into the catastrophic coverage stage. At that point, for the rest of the year, you only pay a low copayment or coinsurance for covered prescription drugs.
What Counts Toward the Donut Hole?
Not every out-of-pocket cost will count toward reaching the donut hole — or even count toward the amount you must spend to break free from the donut hole and get into the catastrophic coverage stage. That’s why it’s important to understand what does and doesn’t apply.
Any Exceptions to the Donut Hole?
You will not find true exceptions to the Medicare donut hole, but a federal prescription drug assistance program is available for people with Medicare Part D. This program is known as Extra Help, and it keeps you from being subjected to the coverage gap.
The Donut Hole is Also Known as the Coverage Gap
Any time someone is talking about the donut hole when they’re talking about Medicare, it has to do with Part D of Medicare. Part D is the part of Medicare which covers prescription drugs.
Planning for the Donut Hole
Again looking at the examples above, you can see how your monthly costs vary wildly from one month to the next throughout the year, depending on what Phase you’re in. Knowing this in advance can help you budget your expenses.
The End of the Donut Hole?
A little light at the end of the tunnel is that the way things stand now, the Donut Hole will be done away with by 2020.
Conclusion
Hopefully now you understand a little better what the Donut Hole is. And now you understand how being able to avoid it, or at least minimize the amount of time you spend in it, can save you hundreds of dollars per year.
