The donut hole, and no I’m not talking about something you order at a Tim Hortons or Dunkin Donuts. Although I love those things. I’m talking about one of the stages in a Prescription Drug Plan. Let me start by explaining that Medicare comes in 4 parts. Part A is hospital coverage that helps in the costs pertaining to inpatient care in hospitals and skilled nursing facilities. I’ll just cover a few of the benefits in each part of Medicare, you can always get more detailed information by calling my office or going to the Medicare.gov website.
Medicare Part B covers the costs for doctors, out-patient care, lab tests, and some home health care services.
Medicare Part C which is offered by private insurance companies is also know as Medicare Advantage, and we now get to Medicare Part D which is the Prescription Drug coverage. This is also offered through private insurance companies and is specifically built to help pay for your prescription drug coverage. I won’t get into all the Medicare rules on the type of coverage you can have to get a drug plan. For example, can I add a drug plan to my supplement plan ? Can I add a drug plan to my Advantage plan? What if I’m only on Medicare, can I still have a drug plan? Your insurance agent, if he’s doing his job, should explain this to you.
Deductible: You pay all the drug costs till the deductible is met. All private insurance companies have different deductibles so it’s wise to see what those levels are before making a decision on a particular drug plan. In 2018 the deductible cannot be more than $405 according to CMS.
Initial Coverage: You will pay a copay or a certain percentage of your drug costs and you plan pays the rest. This is the area where you are getting the full benefit of your plan and your costs are probably at their lowest. It’s after you leave this stage where you get to The Donut Hole or as Medicare describes it The Coverage Gap.
Just so you have an understanding of how you reach this level, Medicare has set the coverage gap at $3,750. So when you and the drug plan reach this amount you enter the Donut Hole.
Coverage Gap: In this stage you will pay the greater share of the costs. You will pay 35% of the costs for brand name drugs and 44% of the costs for generic drugs until your costs reach $5,000. You end up reaching this stage quicker if you take quite a few prescriptions or if the prescriptions you take are brand name or specialty drugs.
At this stage is where I start getting call on why all of a sudden my drug costs went up. One of the things I tell my clients to do is to look at their monthly communication from their drug company. All of them should send you a current statement of where you are with your drug costs, What the current costs of your drugs are,and how far along are you in the different stages. This information is beneficial so that you can keep track of where you’re at and will give you a heads up on increasing costs and maybe a consultation with your physician on if you can prevent entering the Coverage Gap.
Medicare can be overwhelming when you think of all the different areas people have to know and understand. That’s part of the reason I got into this business, to help people make the best possible decision for their particular set of circumstances. Call Cornerstone if you have any questions on the topics I cover or any Medicare question you may have.
Dave Obregon | 888-355-1599