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by Patricia Barry, Updated July 9, 2010
Government officials said Thursday that $250 checks have just been mailed to about 300,000 people with Medicare to help them pay for prescription drugs in Part D’s infamous coverage gap—the “doughnut hole.”
This is the second wave of tax-free payments to be sent out, going to those who fell into the gap in April, May or June this year. About 80,000 people who hit the gap during the first quarter of the year received their checks last month. By the end of the year, about 4 million people are expected to receive the one-time rebate.
The $250 rebate program is the first benefit of the new health care law to take effect. It’s an early effort by the Obama administration to convince consumers, especially Medicare beneficiaries, that help is on the way, though the main provisions of the law won’t begin until 2014.
The amount is small compared with most people’s actual expenses in the gap, when they must currently pay full price after the total cost of their drugs since the beginning of the year reaches $2,830. But the rebate is intended to signal that the doughnut hole—the most unpopular aspect of the Part D drug benefit—will eventually be closed.
Next year, people in the gap will see a 50 percent discount on brand-name and biologic drugs and a 7 percent discount on generics. After 2011 the discounts will grow larger until, by 2020, nobody will pay more than 25 percent of the cost of any drugs in what is now the doughnut hole—that is, between reaching the initial coverage limit and qualifying for low-cost catastrophic coverage.
“Seniors and other Medicare recipients in the Medicare donut hole are struggling to afford the medications they need and their basic living expenses,” said Kathleen Sebelius, secretary of Health and Human Resources in a statement yesterday. “Seventy percent of our first round of these $250 rebate checks were cashed within a week of eligible Medicare recipients receiving them; so, we know that folks really need some help.”
If you’re enrolled in the Part D drug program and expect to fall into the doughnut hole this year, Medicare officials say that this is how the program will work for you:
Patricia Barry is a senior editor at the AARP Bulletin.
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