If you have Medicare insurance, there are chances that you have heard about the Medicare Donut hole. It is also known as the coverage gap – one of the four stages you are likely to encounter as a member of the Part D prescription drug plan.
Members of part D prescription plan usually pay more for prescription drugs compared to those in other plans.
When the Part D program was introduced in 2006, the donut hole was a concern for many people. Just like the name suggests, it was a hole in terms of coverage. Anyone who enrolled was supposed to pay for all the expanses of the prescription drugs.
Simply put, the donut hole is a time during the year when prescription benefits for members change because the initial limit has been reached. That means anyone entering the donut hole is supposed to cater to their own medication for the remainder of the year.
How does the Medicare donut hole work?
First of all, it is important to note that Part D is a prescription drug coverage for those who qualify for Medicare Insurance. Besides, you can also qualify for the donut hole if you currently have a private health insurance plan.
There are two ways of joining the Part D program. You may enroll can join through a Medicare Advantage program on sites like MedicareUSA that has both drug prescription and medical coverage or you can opt to enroll separately.
There are basically four stages in Medicare Insurance and the donut hole happens to be the third one. Every stage serves as a stepping stone to the other. All the four stages start running from 1st January every year.
Stage 1: Deductible stage
At this stage, all members are supposed to pay for prescription drugs before the insurance company begins to contribute its share. The insurance company will only start to pay for your drugs after you have reached your deductible.
However, it is important to note that this may only apply to certain tier or drugs. Tier 1 and Tier 2 drugs have no deductibles. But Tier 3, 3, 4 and 5 have deductibles for drugs.
Deductibles are counted towards any combination of prescription drugs on Tier 5, 4, and 3. Once you have paid the deductible, you will only remit money to your copay for Tier 3, 4, and 5 drugs.
Stage 2: Initial coverage stage
Most people with the Part D drug plan start in the initial stage. This is where your insurer begins to cover some of the payments after you have completed paying the deductible.
At this stage, one is supposed to pay a coinsurance or copay until they reach a certain set amount. This amount is however bound to change in the course of the year.
The initial coverage stage comes to an end after the total cost of drugs and copay equals the amount set by the insurance company.
Stage 3: Coverage gab stage/ the donut hole
This is the stage that many people love because they share the cost of the drug with the insurance companies.
It is a stage where you pay 25 percent of the total cost of generic medications while the drug manufacturer pays for 75 percent.
On the other hand, the drug manufacturing company pays 70 percent of the total cost of branded-name drugs while the insurance company pays 5 percent. You will pay 25 percent.
Stage 4: Catastrophic coverage stage
This is the final stage of the Medicaid insurance plan. You can only enter this stage when your total payments reach $6,350. You will also pay a minimal amount as a copay or coinsurance.
Costs that count in a Medicare donut hole
Although all payments in your Medicare plan are important, there those that you can’t do without. They include the following:
• Coinsurance/copay
• Plan deductibles
• Discount in brand-name drugs
This is however not a conclusive list. There are several other payments that you be forced to pay by the insurance company.
Here are some of the payments that don’t count:
• Pharmacy dispensing fees
• Monthly Medicare prescription premiums for drugs
• Cost for any prescription drugs not covered in your plan
How does one get out of the Medicare Donut Hole plan?
The amount of time one spends in a donut hole normally depends on the cost of drugs covered and the associated benefits. Not everybody will be able to reach the donut hole stage.
But if you manage to, then you will have to spend a specific amount of money on some prescription drugs.
This amount often changes in the course of every year. The amount comprises of your coinsurance and the deductibles for all covered drugs. It also includes the amount of discount paid by the manufacturer of brand-name drugs.
As mentioned earlier, the amount of money doesn’t factor in what you may as monthly premiums nor what your insurance company paid for prescription drugs. Additionally, anyone who qualifies for the ETRA Help program can’t reach the donut hole stage.
Tips on how to avoid the Medicare donut hole
It is always good to look for drugs with the best prices. This is even more important for people enrolled with the Medicare Part D program and have reached the donut hole stage.
Some people are always keen on the prices and drugs and will always compare them before purchasing. That’s why such people rarely find themselves inside the donut hole.
Here are a few tips that can help you avoid the Medicare donut hole:
1. Compare medical plans every year
One of the best places you can find and compare various medical plans is the government’s Medicare website.
Find out if the price of your prescription drug has increased and check if there’s another plan that can help you save money.
2. Discuss with your doctor ways through which you can save on prescription drugs
Some of the things you can suggest to your doctor is lowering the number of drugs you use, switching from brand-name drugs to generic ones, or even stopping medications that are no longer necessary.
3. Find out if the insurance company can offer better prices
Believe it or not, it is possible to get lower prices of drugs in a different pharmacy compared to what you are currently being charged. You can ask your medical plan service team to try and explore other options that offer lower prices.
4. Use cost calculators
You can also make use of cost calculators to find the best prices and avoid the Medicare donut hole. If you already have a Medicare Part D online account, then you can use the drug calculator tool to determine how much you need for your annual prescriptions.
The calculator will be able to show you how much the covered drugs are charged in different pharmacies.
5. Talk to your pharmacist and get less expensive drugs
Take time and go through the list of all your prescription drugs with your pharmacist. Ask what alternative they have and if there’s any you can cut down on the prices.
You can even find a combination of prescriptions that can still serve the purpose and discuss this with your doctor.
Bottom line
In a nutshell, not everyone will always reach the Medicare donut hole also known as the coverage gap. As a senior, you need to consider the above tips and other options that will help you save money on prescription drugs every year.
