Full Answer
How much does Medicare spend on prescription drugs?
The majority of Medicare prescription drug spending—totaling $129 billion in 2016—is for drugs covered under the Part D prescription drug benefit, which is administered by private stand-alone drug plans and Medicare Advantage drug plans.
How many Medicare beneficiaries have no supplemental coverage?
But 1 in 10 Medicare beneficiaries (10%) – 5.6 million people – were covered under traditional Medicare with no supplemental coverage, which places them at greater risk of incurring high medical expenses or foregoing medical care due to costs.
How many Medicare beneficiaries have Medigap insurance?
Medicare supplement insurance, also known as Medigap, provided supplemental coverage to 2 in 10 (21%) Medicare beneficiaries overall, or 34% of those in traditional Medicare (roughly 11 million beneficiaries) in 2018. As with other forms of supplemental insurance, the share of beneficiaries with Medigap varies by state.
Does Medicare cover drug out-of-pocket costs?
Even with Medicare’s prescription drug coverage, beneficiaries can face substantial out-of-pocket costs, particularly if they use specialty drugs or multiple high-cost brand-name drugs.
What percentage or portion of Medicare beneficiaries receive services through Medicare Advantage plans?
Medicare Advantage enrollment has steadily increased both nationally and within most states since 2005, with more than 40 percent of Medicare beneficiaries enrolled in Medicare Advantage plans in 2021.
How much is the donut hole for 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.
What percentage does Medicare pay for prescription drugs?
Medicare will pay 75% of the price for generic drugs during the coverage gap. You'll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs.
What percentage of the Medicare allowed amount for covered drugs and drug related services does Part B usually pay?
20%Under very limited circumstances, Part B covers certain drugs you get in a hospital outpatient setting. You pay 20% of the Medicare-approved amount for these covered drugs.
Why do doctors not like Medicare Advantage plans?
If they don't say under budget, they end up losing money. Meaning, you may not receive the full extent of care. Thus, many doctors will likely tell you they do not like Medicare Advantage plans because private insurance companies make it difficult for them to get paid for their services.
Is Medicare getting rid of the donut hole?
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.
Is Medicare Part D worth getting?
Most people will need Medicare Part D prescription drug coverage. Even if you're fortunate enough to be in good health now, you may need significant prescription drugs in the future. A relatively small Part D payment entitles you to outsized benefits once you need them, just like with a car or home insurance.
How do I avoid the Medicare Part D donut hole?
Five Ways to Avoid the Medicare Part D Coverage Gap (“Donut Hole”...Buy generic prescriptions. Jump to.Order your medications by mail and in advance. Jump to.Ask for drug manufacturer's discounts. Jump to.Consider Extra Help or state assistance programs. Jump to.Shop around for a new prescription drug plan. Jump to.
Why is there a donut hole in Medicare?
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.
Which part of Medicare covers prescription drug services quizlet?
Medicare Part D help cover the cost of prescription drugs, is run by medicare approved insurance companies, may help lower prescription drug costs, and may protect against higher costs in the future.
Does Medicare pay for drugs?
Medicare drug coverage helps pay for prescription drugs you need. Even if you don't take prescription drugs now, you should consider getting Medicare drug coverage. Medicare drug coverage is optional and is offered to everyone with Medicare.
What drugs are not covered by Medicare?
Medicare does not cover:Drugs used to treat anorexia, weight loss, or weight gain. ... Fertility drugs.Drugs used for cosmetic purposes or hair growth. ... Drugs that are only for the relief of cold or cough symptoms.Drugs used to treat erectile dysfunction.More items...
How many people are covered by Medicare Supplement?
Medicare supplement insurance, also known as Medigap, provided supplemental coverage to 2 in 10 (21%) Medicare beneficiaries overall, or 34% of those in traditional Medicare (roughly 11 million beneficiaries) in 2018. As with other forms of supplemental insurance, the share of beneficiaries with Medigap varies by state.
How many Medicare beneficiaries have employer sponsored retirement?
Employer-sponsored Retiree Health Coverage. In total, 14.3 million of Medicare beneficiaries – a quarter (26%) Medicare beneficiaries overall — also had some form of employer-sponsored retiree health coverage in 2018. Of the total number of beneficiaries with retiree health coverage, nearly 10 million beneficiaries have retiree coverage ...
What is Medicare Advantage?
Medicare Advantage plans provide all benefits covered by Medicare Parts A and B, often provide supplemental benefits, such as dental and vision, and typically provide the Part D prescription drug benefit. Many traditional Medicare beneficiaries also rely on other sources of coverage to supplement their Medicare benefits.
How is supplemental coverage determined?
Sources of supplemental coverage are determined based on the source of coverage held for the most months of Medicare enrollment in 2018. The analysis excludes beneficiaries who were enrolled in Part A only or Part B only for most of their Medicare enrollment in 2018 (n=4.7 million) and beneficiaries who had Medicare as a secondary payer ...
Does Medicare have supplemental coverage?
No Supplemental Coverage. In 2018, 5.6 million Medicare beneficiaries in traditional Medicare– 1 in 10 beneficiaries overall (10%) or nearly 1 in 5 of those with traditional Medicare (17%) had no source of supplemental coverage. Beneficiaries in traditional Medicare with no supplemental coverage are fully exposed to Medicare’s cost-sharing ...
Does Medigap increase with age?
While Medigap limits the financial exposure of Medicare beneficiaries and provides protection against catastrophic expenses for services covered under Parts A and B, Medigap premiums can be costly and can rise with age, depending on the state in which they are regulated.
Does Medicare Part B cover Part B?
As of January 1, 2020, Medigap policies are prohibited from covering the full Medicare Part B deductible for newly-eligible enrollees; however, older beneficiaries who are already enrolled are permitted to keep this coverage.
How many people in Medicare are not covered by prescription drugs?
Many Medicare Beneficiaries Lack Reliable and Meaningful Drug Coverage. About 40% of Medicare beneficiaries lack prescription drug coverage at some point in the year; most of these beneficiaries lack coverage for the entire year. Medicare beneficiaries with supplemental drug coverage are at risk of losing that coverage.
What is the effect of lack of drug coverage on Medicare?
Lack of Drug Coverage Threatens Access to Needed Medications. In 1998, Medicare beneficiaries who lacked drug coverage filled 31% fewer prescriptions than did beneficiaries with drug coverage, but spent an average of 40% more out-of-pocket on prescription drugs. Beneficiaries with high blood pressure who lack drug coverage are less likely ...
How many states had pharmacy assistance programs in 2001?
In July 2001, only 19 states had pharmacy assistance programs that subsidized the cost of prescription drugs in operation. However, only 3% of Medicare beneficiaries nationwide were enrolled in such programs in 2001. Most state pharmacy assistance programs have strict eligibility limits.
How much did Medicare beneficiaries lose in 1999?
In addition, about 44% of Medicare beneficiaries with incomes between $10,000 and $20,000, and about one-third of beneficiaries with incomes at or above $20,000 , lacked prescription drug coverage in 1999.
How many people in 1999 did not have prescriptions?
Nearly 40% of Medicare beneficiaries with annual incomes below $10,000 lacked prescription drug coverage in the fall of 1999. In the fall of 1999, among Medicare beneficiaries with incomes below $10,000 who did not have drug coverage through Medicaid, nearly 60% lacked prescription drug coverage. In addition, about 44% of Medicare beneficiaries ...
How much did Medicare pay for prescriptions in 1999?
Nearly 90% of Medicare beneficiaries filled at least one prescription in 1999. Together, aged and disabled Medicare beneficiaries are estimated to spend an average of $860 out-of-pocket for prescription drugs in ...
What age can I get pharmacy assistance?
Most state pharmacy assistance programs have strict eligibility limits. Some exclude disabled Medicare beneficiaries who are under age 65. Others target only low-income beneficiaries, and do not help beneficiaries with moderate incomes who also need drug coverage.
How much of Medicare was covered by prescription drugs in 2016?
Prescription drugs covered under both Part B and Part D accounted for 19% of all Medicare spending in 2016. 3. Ten drugs accounted for 17% of all Part D spending in 2016 (including both Medicare and out-of-pocket spending). 4.
How much did Medicare Part D spend in 2016?
Medicare Part D enrollees who did not receive low-income subsidies spent about $500 out of pocket on their prescriptions in 2016, on average, but 1 million enrollees with spending above the catastrophic threshold spent nearly $3,200 out of pocket. 8.
Can Medicare Part D pay out of pocket?
Medicare Part D enrollees can pay thousands of dollars out of pocket for specialty tier drugs, with the majority of costs for many specialty drugs occurring in the catastrophic phase of the benefit. 10. Many proposals to reduce prescription drug costs enjoy broad support among Democrats and Republicans.
Is Medicare a private insurance?
Medicare is second only to private insurance as a major payer for retail prescription drugs. The program’s share of the nation’s retail prescription drug spending has increased from 18% in 2006 to 30% in 2017.
How much of your prescription drug costs will you pay after you reach the coverage gap?
You’ll pay no more than 25% of your drug costs after reaching the coverage gap. The coverage gap ends when your out-of-pocket expenses for medications on the plan’s formulary reach a certain threshold, which may change each year. At this point, you enter the catastrophic coverage phase.
What is the Medicare Part D coverage gap?
Summary: Most Medicare Part D prescription drug plans include a coverage gap in Part D benefits, also known as the Medicare “donut hole. ”. During this gap in prescription drug coverage, beneficiaries may have to pay more of their prescription drug costs until they reach the catastrophic coverage phase of their plan.
Is the Medicare coverage gap closed?
Because of provisions in the Affordable Care Act, beneficiaries paid a lower percentage toward their drugs while in the coverage gap each year. As of 2020, the coverage gap is officially closed.
Will everyone enter the Medicare coverage gap?
Not everyone will enter the Medicare coverage gap, or “donut hole,” each year. For example, Medicare beneficiaries who get Extra Help paying for Part D costs won’t enter this coverage gap. Here are some ways you may be able to save money on prescription drugs:
Do you pay coinsurance on Medicare prescriptions?
In the catastrophic coverage phase of a Medicare prescription drug plan, you only pay a small coinsurance or copayment on covered medications for the rest of the calendar year.
Introduction
- The lack of a prescription drug benefit is often cited as a major shortcoming of Medicare, the federal health insurance program for older and disabled Americans. About one-third of noninstitutionalized beneficiaries have no prescription drug coverage. Many other beneficiaries who have drug coverage incur substantial out-of-pocket drug expenses as a...
Prescription Drug Coverage and Supplemental Insurance Coverage
- About 65 percent of noninstitutionalized beneficiaries have some form of prescription drug coverage. Most of these individuals receive their drug coverage through their primary source of supplemental health insurance. Figure 1shows the primary sources of supplemental coverage among the 25.6 million Medicare beneficiaries estimated to have drug coverage in 1999. 1. Alm…
Characteristics of Beneficiaries with and Without Prescription Drug Coverage
- The most defining demographic difference between beneficiaries with and without prescription drug coverage is level of income. Almost 45 percent of beneficiaries without drug coverage have incomes at or below 200 percent of the federal poverty level, compared with 33 percent of beneficiaries with drug coverage (Figure 3). Beneficiaries without drug coverage are slightly mor…
Out-Of-Pocket Spending on Prescription Drugs
- Although beneficiaries with drug coverage spend substantially less out-of-pocket on prescription drugs than those without drug coverage ($320 per year vs. $590, on average), having supplemental drug coverage does not necessarily protect beneficiaries from high out-of-pocket costs. As indicated in Figure 4, average out-of-pocket prescription drug spending varies consider…
Barriers to Obtaining Prescription Drug Coverage
- Medicare beneficiaries who want to reduce their out-of-pocket prescription drug expenses by obtaining supplemental coverage often are not able to do so. 1. Beneficiaries with employer-sponsored supplemental insurancecoverage, who are by far the largest group of beneficiaries with drug coverage, account for only 30 percent of the 39 million noninstitutionalized beneficiaries es…
Conclusions
- While almost two-thirds of Medicare beneficiaries have some prescription drug coverage, many of these beneficiaries, particularly those who obtain coverage from individually purchased supplemental plans, still incur substantial out-of-pocket drug costs. Those who can least afford to pay for their drugs--beneficiaries with lower incomes-are those least likely to have prescription d…
Footnotes
- About 5 percent of Medicare beneficiaries are estimated to reside in institutions for the entire year (AARP analysis of Medicare Benefits Simulation Model).
- Beneficiaries can have multiple sources of supplemental insurance and multiple sources of prescription drug coverage. The Medicare Benefits Simulation Model, from which our estimates are derived, c...
- About 5 percent of Medicare beneficiaries are estimated to reside in institutions for the entire year (AARP analysis of Medicare Benefits Simulation Model).
- Beneficiaries can have multiple sources of supplemental insurance and multiple sources of prescription drug coverage. The Medicare Benefits Simulation Model, from which our estimates are derived, c...
- QMB enrollees have incomes exceeding state Medicaid eligibility limits but are still below 100 percent of the federal poverty level. QMB enrollees receive Medicaid coverage for Medicare Part B prem...
- In 1999, the projected federal poverty levels for persons under age 65 are $8,760 for individuals, and $11,334 for couples. For persons age 65 and over, the projected levels are $8…
Data Sources and Methods
- Data source.
This paper is based on data collected for the MCBS 1998 Cost and Use File. The MCBS is a continuous, multipurpose survey of a representative sample of the entire Medicare population. One of the survey’s strengths is its collection of information about goods and services not cover… - Measuring drug coverage.
Prescription drug coverage was determined in a two-step process. First, beneficiaries were classified by their primary supplemental health insurance and were counted in only one of the following categories (in hierarchical order for beneficiaries with more than one type): Medicare ri…
Trends in Drug Insurance Coverage, 1997–1998
- In 1998, 73 percent of community-dwelling Medicare enrollees had drug coverage at some point during the year, leaving just over ten million beneficiaries, or 27 percent, with no drug coverage (Exhibit 1 ). Those estimates are virtually unchanged from 1997. Given that coverage rates had increased in every year after 1992, the lack of an increase in ...
Demographic Characteristics
- Medicare enrollees without drug coverage for prescription drugs continued to receive fewer medications and spend less in total for drugs than was the case for covered beneficiaries (Exhibit 2 ). On average, noncovered beneficiaries filled 16.7 prescriptions in 1998—a 2.4 percent decline from 1997. At the same time, those beneficiaries spent an average of about $550 on their prescr…
Health Status, Supplemental Insurance, and Income
- Health status.
The gap in use and spending by coverage status and self-reported health status widened from 1997 to 1998 (Exhibit 3 ). In 1998 covered beneficiaries in poor health spent $910 more in total for drugs than their noncovered counterparts spent. That divergence was a 30 percent increase fro… - Supplemental coverage.
Examination of use and spending shifts by type of supplemental insurance coverage reveals a variety of changes. Differences in utilization grew for those insured by employer and individually purchased plans with and without drug coverage and remained about the same for beneficiarie…
Out-Of-Pocket Drug Spending
- On average, beneficiaries without drug coverage spent $546 ($33 per prescription) out of pocket in 1998, compared with $325 ($13 per prescription) for beneficiaries with coverage (Exhibit 4 ). Out-of-pocket expenses were virtually unchanged for beneficiaries without coverage between 1997 and 1998 but increased for those with coverage. The out-of-pocket spending gap actually …
Discussion and Policy Implications
- Since the first year of the MCBS in 1992, the data have shown that the prescription drug coverage rate for Medicare beneficiaries has risen steadily, which indicates that enrollees who wanted drug coverage acquired it. Starting in 1998 the MCBS and other sources suggest that drug coverage may have leveled off.
Notes
- 1 Henry J. Kaiser Family Foundation, “Prescription Drug Trends,” fact sheet (Menlo Park, Calif.: Kaiser Family Foundation, September 2000 ). Google Scholar
- 2 Retail prescription prices increased 6.7 percent annually from 1991 to 1998. Sonderegger Research Center analysis based on average prescription prices by pharmaceutical consulting firm Scott-Levi...
- 1 Henry J. Kaiser Family Foundation, “Prescription Drug Trends,” fact sheet (Menlo Park, Calif.: Kaiser Family Foundation, September 2000 ). Google Scholar
- 2 Retail prescription prices increased 6.7 percent annually from 1991 to 1998. Sonderegger Research Center analysis based on average prescription prices by pharmaceutical consulting firm Scott-Levi...
- 3 J.A. Poisal and G.S.Chulis, “Medicare Beneficiaries and Drug Coverage,” Health Affairs (Mar/Apr 2000 ): 248 –256 ; and M. Davis et al., “Prescription Drug Coverage, Utilization, and Spending amon...
- 4 Beneficiaries were assigned to the first insurance category in which they spent all of their Medicare-eligible months. Enrollees who switched categories during the year were assigned t…