The Part D “Donut Hole” Is Not as Tasty as You Might Think
Apple is a 605 billion dollar company. Blackberry is a pocket-sized desktop computer. Yes, it’s true. You can now add one more item to your list of foods the 21st century has complicated. You may be used to eating a donut hole with your cup of joe in the morning, but keep in mind that the Part D “donut hole” is not nearly as powdery, chocolately or delicious. In fact, it could be costing you on your prescription drug plan.
To clarify, The Part D donut hole is a gap in your prescription drug coverage. In the donut hole, you continue to pay normal premiums but Part D covers less. This means higher drug costs and less expendable income for you.
There are 5 main things you need to know about this mysterious pseudo-food:
1. The Donut Hole Starts When You Reach $3,820 in Total Prescription Drug Costs.
The key word here is total. $3,820 is not what you pay for drugs. It is not what Part D pays. It is the sum of both. The only cost not included in the $3,820 threshold is your monthly premium.
2. Once You Are In the Donut Hole, You Will Pay 30% For Brand Name Drugs and 37% For Generic Drugs.
3. The Donut Hole Ends When You Reach $5,100 in Out-of-Pocket Prescription Drug Costs
Again, this tidbit of info has a keyword. In this case, it is “out-of-pocket”. The amount of money Part D pays is irrelevant. The $5,100 figure only includes what you pay for prescription drugs, minus the monthly premium, of course! Once you exceed $5,100 for out-of-pocket costs, you enter into what is known as “catastrophic coverage”. At this point, you only pay 5% of your prescription drug costs.
4. Medication Costs are Rising.
This might seem obvious. But what might not be obvious is the effect it can have on your entry into the donut hole. The higher the cost of drugs, the sooner you pay the higher 30 or 37 percent coinsurance rate. For example, in the Pittsburgh Post Gazette’s article about rising drug costs, they tell the story of retiree Milly Scott. This seasoned Medicare beneficiary was used to her usual copays until the rising costs of drugs put her in the donut hole late in the year, October. The very next year she entered the donut hole 3 months earlier, in July! Part D coverage gaps paired with higher costs can wreak havoc on your finances, so plan accordingly.
5. The Donut Hole Is Closing
I made sure to save the best news for last. Although the donut hole is not gone yet, it is on its way out the door. Regardless of your opinion of the Affordable Care Act, it is shrinking the coverage gap dramatically. Beneficiaries used to pay the full amount of their drugs in the donut hole, and now they only have to pay 30-37%. The plan is to close the coverage gap completely by 2020!
In light of this news, I suggest breaking out some Krispy Kremes to celebrate!
Have more questions about the donut hole? Contact our office for a one-on-one appointment and we can tailor an appointment for you! Call Seniormark at 937-492-8800.