What is the Medicare Part D donut hole?

Many Medicare Part D plans have a coverage gap, which is also called a donut hole. This essentially means that there is a temporary limit on what the drug plan will cover your drugs. Not everyone will enter the coverage gap, as the gap begins after a certain amount has been spent to cover prescription drugs. 

How much you pay for your prescription drugs will depend on your Medicare plan and how much your plan typically covers. The “donut hole” is one of the coverage phases that fall under Medicare Part D. Each new coverage phase starts when your spending has reached a certain amount. 

Once you have fallen into the coverage gap, or “donut hole,” it is important to understand which of your out-of-pocket costs count towards reaching the catastrophic coverage phase. The catastrophic coverage phase ensures you will only pay a small coinsurance or copayment amount for covered drugs for the duration of the year. 

If your prescription drug spending reached $6,350 in the year 2020, you would have catastrophic coverage for the rest of the year. 

  • Your prescription drug plan’s yearly deductible
  • The amount of money you owe for prescription medications
  • The 70% manufacturer discount for brand-name drugs while you are in the coverage gap

Will count towards your out of pocket spending, and get you out of the “donut hole.” 

What costs will not count towards getting out of the “donut hole”?

Not all of your out-of-pocket costs will count towards reaching catastrophic coverage. The following costs do not count towards getting leaving the coverage gap:

  • The premium for your Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan
  • The costs you pay for prescription drugs that are not covered by your Medicare plan

How do you avoid the “donut hole”?

Those who qualify for the Low-Income Subsidy or Extra Help will avoid the coverage gap. Extra Help is a program that helps individuals who qualify with limited income pay for Medicare Part D costs-including premiums, deductibles, copayments, and coinsurance. To apply for Extra Help, apply through your state’s Medicaid department. 

Managing your out-of-pocket prescription drug costs is a big part of avoiding that coverage gap. To spend less money on your medications, try exploring which of your most expensive prescription drugs have a lower cost or generic option. Make sure to talk with your doctor about whether these lower-cost drugs will be effective for your condition. 

If you do not meet the income requirements for Extra Help, you may be eligible for assistance from the manufacturer of the brand name drug you use. By visiting Medicare.gov, you can research assistance programs for the specific medications you take. 

Depending on where you live, you may also be able to apply for state assistance programs to help with Medicare Part D costs. States with programs will also be listed on Medicare.gov. 

Comparing all of your potential coverage options will help lower your out-of-pocket prescription drug costs and keep you out of the “donut hole.” 

For any questions, give Temmen Insurance Inc. a call at 417-633-7200. 

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