Medicare Coverage Gap; “Medicare Donut Hole”
Thursday, August 26th, 2010- Medicare is the Federal Health Insurance Program that covers 45 million Americans.
- More than 26 million Medicare beneficiaries are enrolled in Medicare drug plans, including 17.5 million in stand alone prescription drug plans and 9 million in Medicare Advantage drug plans.
- The number of low income subsidy benchmark plans varied considerably across regions in 2009, ranging from a low of one prescription drug plan in Nevada and two prescription drug plans in Arizona to a high of 16 prescription drug plans in Wisconsin.
- In 2009, three quarters of stand-alone prescription drugs programs and three-fifths of Medicare Advantage prescription drug plans offer little or no gap coverage. In 2009 the coverage gap begins after enrollees incur $2700.00 in total drug costs. Of the 17 prescription drug plan sponsors with plans available in every region in 2009, nine offer some type of gap coverage in at least one of their plan offering, down from 12 in 2008.
- In 2009, 93 percent of prescription drug plan enrollees are enrolled in plans with no gap coverage.
- Medicare Part D enrollees pay the full cost of their prescriptions when they reach the coverage gap. Between 2007 and 2009, the two prescription drug plans with the highest enrollment, AARP Medicare RX Preferred and Humana Standard Prescription Drug Plan, posted double-digit price increases for commonly used brand name drugs. Over the two year period, prices for the following brand-name drugs increased, on average, by about 19 percent in both the AARP and Humana Prescription Drug Plans: Actonel, Advair, Diskus, Aricpet, Diovan, Lexapro, Lipitor, Nexium, Plavix, and Prevacid.
- Medicare Part D plans are an important source of prescription drug coverage for nearly 60 percent of the 45 million Medicare Beneficiaries in 2009.
- The Size of the coverage gap increases each year (from $3,216 in 2008 to $3,454 in 2009) Among beneficiaries who reach the gap, one fifth either stop taking one of their drugs or switch to another alternative drug class.
- A unique feature of the Medicare Part D drug benefit is the coverage gap, or so called “donut hole” – a gap in coverage in which Part D enrollees are required to pay 100 percent of the total drug costs until they reach the catastrophic coverage level.
- An estimated 3.4 million Part D Enrollees (14 percent of all enrollees and 26 percent of those using prescription drugs and not eligible for low income subsidy) reached the coverage gap in 2007.
- Seniors who fall into the donut beginning January 1, 2010, will receive a 50% discount on brand name drugs. Also the size of the gap will be cut by $500 under the revamped House Healthcare Reform Bill. The hole should be closed by 2019.
- In June 2009, President Obama made an $80 billion deal with the pharmaceutical industry to cut prescription drug costs for the nation’s seniors. Under the new agreement, drug companies would pick up 50% of the tab for some of those patients falling into Medicare’s so-called donut hole.
- The Kaiser Family Foundation reported that about 3.4 million Medicare beneficiaries hit the donut hole in 2007 and about 15 percent of them stopped taking their medications as a result.
- For 2009, the gap begins after the cost of a Medicare Part D beneficiary’s prescription drugs, including the patients own deductibles and co-pays, has reached $2700.00. The individual then is responsible for directly paying the next $3453.75 until the total drug costs have reached $6153.75. At this point, catastrophic coverage sets in and Medicare again begins covering costs.
- There are some factors that apply to your vulnerability to entering into the coverage gap
- Only drugs covered by your insurance plan count in the coverage formula
- Drug-related expenses that do not count include monthly insurance premiums and any drug purchased from other countries
- Each year the total amount of money you must pay out of pocket once you reach your annual coverage cap changes. Check to see what the new coverage is every fall.
- Annual caps are computed on a calendar year basis.
- More than 3 million of the nearly 27 million older or disable American who receive the Medicare drug benefit are expected to reach the coverage gap this year and pay the full cost of their prescriptions, says the AARP Public Policy Institute
- Beneficiaries hit the donut hole once their total drug expenses- both Medicare’s costs and their out-of-pocket costs- exceed $2700.00. Unless they qualify for a government subsidy or have bought extra insurance, they’re on their own for the next $3454 in prescriptions. At that point, after paying a total of $4350 out of pocket, beneficiaries become eligible for Medicare’s catastrophic coverage and are responsible for 5 % of their bills for the rest of the year. The process repeats itself each January 1.
- Sixteen percent of beneficiaries who hit the gap reduce their medication or stop taking their drugs altogether, says the Kaiser Family Foundation.
- About 10 million Medicare beneficiaries with the limited incomes and assets received extra help that pays almost all of their out-of-pocket drug costs. The subsidy essentially exempts them from the coverage gap.
- Ways to Shrink the Donut Hole
- Ask your doctor if you can switch to generic, over the counter or other low cost drugs that would work as well.
- Look into drug makers assistance programs. Go to Medicare’s website, www.medicare.gov, and click on “Lower Your Costs During the Coverage Gap” to see if your drugs are included in any of the programs and how to apply.
- Ask your doctor for Free Samples
- Apply for extra help. If you have a limited income and resources, you may qualify for a government subsidy to reduce your out-of-pocket drug expenses. Check with Social Security by visiting www.socialsecurity.gov or call 1-800-772-1213
- Catastrophic coverage- it assures that once you have paid $4350 (in 2009) out of pocket for drug costs in a calendar year, almost all of your drug costs above that amount are covered.
- Medicare’s Tips for avoiding, delaying, or saving money in the coverage gap
- Consider switching to generic, over the counter, or other lower cost drugs. Switching to lower cost drugs may be enough to help you avoid the coverage gap and can save you hundreds or even thousands of dollars a year.
- Keep using your Medicare drug plan card, even while you’re in the coverage gap, to ensure that you’ll get the drug plan’s discounted rates and that the money you spend counts toward you catastrophic coverage.
- Explore National and Community Based Charitable Programs that might offer assistance (such as the National Patient Advocate Foundation or the National Organization for Rare Disorders). Comprehensive information on Federal, state, and private assistance programs in your area is available on the Benefits Check Up website, www.benefitscheckup.org
- Look into Pharmaceutical Assistance Programs (sometimes called Patient Assistance Programs) that may be offered by the manufacturers of the drugs you take. Many of the major drug manufacturers are offering assistance programs for people enrolled in a Medicare drug plan. You can find out whether a Pharmaceutical Assistance Program is offered by the manufacturers of the drugs you take by visiting www.medicare.gov and selecting “Lower Your Costs During The Coverage Gap”
- Look at State Pharmaceutical Assistance Programs (SPAP) for which you may qualify. Arizona does not qualify for this
- Apply for extra help. If you have Medicare and have limited income and resources, you may qualify for extra help paying for your prescription drugs. Contact Social Security by visiting www.socialsecurity.gov or calling 1-800-772-1213
- You can also contact the State Health Insurance Assistance Program (SHIP) at Toll Free: (800) 432-4040 Local: (602) 542-6595
- You can call Medicare at 1-800-MEDICARE, 1-800-633-4227 to get any phone numbers or answers.
- Some Pharmaceutical Companies offer assistance programs for the drugs they manufacture. The value of any assistance you receive from a Pharmaceutical Assistance Program for your drug(s) will not count toward your out-of-pocket costs or total spending under your part D benefit.
The “Donut Hole” information we have provided may not be up to date. The terms of this program continue to evolve. Please do not accept any of the aforementioned data as correct, but contact Medicare with any specific questions.