What is the donut hole in Medicare Part D Coverage?
To explain the donut hole, we must first understand how Medicare works. Medicare is an insurance program for people 65 years and older as well as people under 65 with certain disabilities. In addition to the insurance, those with Medicare also have the option of enrolling in a prescription drug program called Medicare Part D for a monthly fee.
The donut hole is a coverage gap, meaning there’s a temporary limit on what the plan will cover. The amount may change yearly, but in 2019, you enter the donut hole once you and your plan have reached the spending limit of $3,280. At that point, you will pay out-of-pocket until you reach your catastrophic coverage at $5,100, at which point your insurance will kick in again.
As you can guess, these coverage gaps can be costly and burdensome for seniors on a fixed income. However, not everyone will enter the coverage gap. Those who receive what Medicare calls extra help in paying for Part-D will not enter the coverage gap.
The original purpose of the gap was to encourage Part D members to buy generic as opposed to name-brand medicines. However, for some people, that’s possible. Not all medicines have a generic form. This causes many individuals to reach the gap sooner and overall end up paying more for prescriptions.
Thankfully, the coverage gap is closing.
Congress has recently passed laws to help close the coverage gap. Starting in 2019, you’ll pay 25% of costs out of pocket with your plan picking up the remaining costs. Of that 25% you pay, 95% will go toward getting you out of the coverage gap. The goal is to have completely closed the gap by 2020, which will no doubt help a lot of seniors stretch their money a little further.
Tips for avoiding the coverage gap.
Unfortunately, there isn’t any supplemental insurance that can help you out since the gap is only temporary. Instead, you can try out the following to help lower your costs and potentially avoid the gap altogether.
- Shop generic when possible.
- See if you qualify for the Extra Help program.
- Ask your doctor about possible discounts.
- Make use of prescription drug discount programs.
If you’d like to know more, feel free to talk to your Personal Benefits Manager. They’d be happy to give you expert advice to help you with your situation.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.