Say Goodbye to the Medicare Donut Hole
Say Goodbye to the Medicare Donut Hole
For years the Medicare donut hole has caused confusion among today’s senior citizens. While everyone was thankful for the creation of Medicare Part D in 2006, the structure of these plans and the dreaded donut hole has made them difficult to understand and navigate.
Fortunately, we can now say bye-bye to the Medicare donut hole thanks to the recent budget deal.
Why Was There a Donut Hole in the First Place?
While Medicare itself does not sell Part D drug plans, it did establish certain minimum guidelines for all insurance companies to follow when creating Part D drug plans. These guidelines include a standard model of cost-sharing and four stages for each plan that trigger when certain drug spending amounts are reached.
Every year Medicare declares that year’s Part D deductible, initial coverage threshold, coverage gap (donut hole) and catastrophic coverage limit for the upcoming year. These guidelines are important so that there is some consistency among plans which makes it easier for seniors to shop and compare options each year.
One of these guidelines requires that seniors pay more for their prescriptions if their total annual drug costs go over a certain amount. Congress originally created Medicare Part D plans with this donut hole to gain senior participation in using generic drugs whenever possible. Our federal government foots a large part of the cost of drug coverage for people on Medicare, so it’s in their best interest for beneficiaries to use cheaper generic medications whenever possible.
By creating a hole in the middle of the Part D drug plan year where seniors pay more for their medications if their annual costs go beyond that coverage gap limit, our legislators gave people a reason to ask their physicians for cheaper alternative drugs whenever possible.
Enter the Affordable Care Act
While there’s no question that the donut hole did encourage people to use cheaper drugs when possible, this gap in coverage was a great hardship for many people. There are some brand-name prescription drugs which are very expensive and still under patent. Since there was no alternative for some of these medications, seniors who hit the gap were forced to pay more for their necessary medications.
There was quite a lot of criticism over this because it placed some people in the situation of choosing between important medications and food or rent. A significant percentage of Medicare beneficiaries live on Social Security alone during retirement. Enough people raised the alarm over this that legislators included a slow repeal of the donut hole in the Affordable Care Act legislation of 2010.
Beginning in 2012, the ACA legislation reduced the percentage that seniors paid toward their medications in the gap. It also called for a schedule that continued to reduce this percentage annually until 2020 when the donut hole was scheduled to close altogether.
The Bipartisan Budget Act
The cost of prescription drugs in America has been a major concern for several years and was a topic of hot discussion during the presidential elections in 2017. So, in the recent budget deal, Congress was able to close the donut hole a year ahead of schedule by requiring big pharma companies to pay a higher percentage of the costs of beneficiaries who hit the donut hole.
As a result, seniors can now look forward to more stable and predictable drug expenses in January of 2019. After the Medicare Part D deductible has been reached, drug manufacturers must cover at least 75% of the cost of medications until the beneficiary’s annual spending reaches the catastrophic coverage limit.
Once they reach the catastrophic coverage limit, they then pay only 5% of the cost of their covered medications for the rest of the year.
To be sure, these changes are welcome news for millions of beneficiaries who have struggled to pay their brand-name drug expenses each year. It remains to be seen if or how these changes may affect the costs of drug plans in 2019, but at least we can say goodbye to the donut hole for good.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Thank You to Our Guest Blog Writer:
Danielle Kunkle
Co-Founder of Boomer Benefits
www.boomerbenefits.com
Danielle Kunkle is the co-founder of Boomer Benefits, an insurance agency specializing in Medicare-related insurance products.
They help baby boomers New to Medicare learn about their benefits and coverage options across 47 states.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Alternatives for Seniors is a print and online directory that specifically caters
to the housing and personal care concerns of senior citizens and their families.
When the time comes to find Senior Housing for yourself or a loved one, turn to Alternatives for Seniors. We offer FREE personalized assistance in finding the best senior housing option for you or your loved one. A place that matches your interests, needs and offers the amenties that best suit you –– one that is conveniently located near your loved ones.
Call our Senior Advisors at (888) WE-ASSIST (888-932-7747).
If you are not ready to talk to an Advisor, visit the Alternatives for Seniors website to begin searching for the perfect home. Housing options include: Senior Apartments, Independent Living, Assisted Living, Memory Care and Nursing/Rehab Centers or explore your options such as Adult Day Centers or in-home assitance like Home Care and Hospice.
Also, be sure to join our Facebook community and follow us on Twitter and Pinterest.