Understanding the Medicare Donut Hole.pdf

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Understanding the Medicare Donut Hole
Medicare is a federal health insurance program administered by the Centers for Medicare &
Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services
(HHS). This program pays for a range of health care expenses for those who are 65 years or
older, along with younger people with certain conditions. But most of these health plans
with Medicare prescription drug coverage have a coverage gap known as the Medicare
Donut Hole.
What is Medicare Donut Hole?
Medicare Donut Hole is defined as the coverage gap or out-of-pocket costs that you will
have to bear on your own after you and your drug plan have spent a certain amount of
money for covered drugs. These out-of-pocket costs need to be paid for your prescriptions
until you reach a yearly limit. Once you have reached this y early limit, the Medicare Donut
Hole or coverage gap ends, and your drug plan starts paying for the covered drugs again.
Understanding the Donut Hole
The exact amount to enter and exit the Donut Hole changes every year. The coverage gap
has shown a decline in the past few ye ars. In fact, it has been predicted that by 2020 the
cost you pay for generic drugs will shrink to 25% while in the gap.
Understanding how your prescription drug expenditures are calculated with Plan D is
essential as you’ll then get an idea about how much out-of-pocket cost you could be asked
to pay. The amount that you p ay for your prescription drug plus the amount that your
Medicare plan pays on your behalf, is added up to reach your expenditures. Most people are
unaware of this fact and that’s the reason they get ‘the shock of their life’ when they hit the
Donut Hole. Many people do not get a detailed report of their Medicare plan, and are taken
aback when they hit the coverage gap much before they expected.
How does the Medicare Donut Hole work?
How the Donut Hole affects you will be decided by how much you spend on prescription
medications in 2016. The coverage gap begins when your total drug costs have reached a
certain amount for that calendar year. For 2016, when you reach $3,310, you hit the
coverage gap.
How to get out of the Donut Hole?
Once you have paid $4,850 out-of-pocket for the covered drugs since the start of the year,
you can get out of the Donut Hole in 2016.