Medicare Donut Hole

What is the Medicare Part D Donut Hole?

Donuts are not the only thing that Medicare Part D does not cover! The cost of Medicare drug plans has what are known as “coverage gaps”, which means there is a limitation on what the plan will cover for your prescriptions. It is important to point out that not every person will be impacted by the Donut Hole. If you spend a certain amount for your prescriptions, the Donut Hole will then begin impacting you. For 2019, the amount is $3,820. If you go over this limit, you will be left paying for the Donut Hole.

What counts toward the Donut Hole?

  • Yearly deductible
  • Coinsurance
  • Copayments
  • Discounts on brand-name drugs
  • What you pay in the coverage gap

Brand Name Drugs

When you reach this amount, you will be obligated to pay no more than 25% of the plan’s cost for coverage brand-name drugs. If you purchase at a pharmacy or go the mail route, you will receive savings. The discount that comes from your plan may be lower or higher, depending on the pharmacy and plan’s set amount.

Example of cost associated with brand name drugs:

Felicia reaches her $3,820 spending limit, which results in her receiving the Donut Hole. She stops by her pharmacy on the way home from her doctors visit to fill a prescription. The drug she will be getting is a covered brand-name prescription and it cost $80. There is a $3 dispensing fee that is added to the total amount of her drug. Felicia is required to pay 30% of her plan’s cost and the additional fee.

What is her total cost? $83 x .30 = $24.90

Felicia will pay $24.90 plus the manufacturer discount payment ($40.00), which is out-of-pocket spending. The $64.90 helps Felicia get out of the Donut Hole. Felicia’s remaining $6.25, which is 5% of the drug cost and 75% of the dispensing fee paid by drug plan. Does not count toward Felicia’s out-of-pocket spending.

Generic Drugs

For 2019, the set amount Medicare will pay for generic drugs are 63% during the Donut Hole. You are left will the remaining 37% of the cost. The amount you pay during this coverage gap decreases every year until it reaches 25% in 2020.

Example of cost associated with generic drugs:

Jimmy reached his spending limit for his Medicare drug plan in 2019. He stops by the pharmacy to grab his prescription for a generic drug. The cost is $25 and there is a $3 dispensing fee. Jimmy will be obligated to pay 37% of his plan’s cost for the drug with the additional fee.

What is his total cost? $28 x .37 = $10.36

The total cost of $10.36 he will pay is counted as out-of-pocket spending, which assists in getting Jimmy out of the Donut Hole.

I heard the Medicare Donut Hole is going away. Is that true?

Yes! Beginning in 2020, the Medicare Donut Hole will be gone! 

How can MWG Senior Services help you?

As an added service to our Medicare Supplement clients, we will provide an annual prescription drug plan review.

If you have questions about navigating the ever-changing Medicare maze or retirement insurance options, we have advisors ready to light the way! Call us at (877) 759-5760 or email senior.services@morganwhite.com. It’s that simple!

To request a quote online, click https://mwgseniorservices.com/medsupp.