Q. After I fell into the Part D doughnut hole, one of my drugs actually cost me less than I'd paid earlier in the year, when it was fully covered by my drug plan. How is this possible?
A. It sounds difficult to believe! But yes, it is possible and is now actually happening in some cases — if certain circumstances come together in a particular way.
See also: Medicare plans in 2012.
Remember that until the end of 2010 people who fell into the dreaded doughnut hole — the coverage gap in the middle of the Part D prescription drug benefit — had to pay 100 percent of the cost of their drugs until they'd spent a certain amount out of pocket in any one year.
But since the beginning of 2011, the pharmaceutical manufacturers have provided a 50 percent discount on brand-name drugs in the doughnut hole, as required by the new health care law, the Patient Protection and Affordable Care Act. So now, Part D enrollees pay half as much for those drugs in the gap as they did before.
And sometimes the 50 percent they pay is lower than the regular copay that their Part D plan charges for a particular drug in the coverage period that precedes the gap.
Here are some real examples:
Example 1: A Part D drug plan pays $108.58 to the manufacturer for a month's supply of the antidepression drug Lexapro 10 mg. The plan places this drug in its pricing level for "non-preferred brands," which requires a copay of $95 a month in the initial coverage period. But in the doughnut hole, this drops to $55.04 for a month's supply (50 percent of the drug's full price plus a small dispensing fee).
Example 2: A different Part D drug plan pays $63.68 to the manufacturer for a month's supply of the menopause drug Premarin 0.9 mg. The plan places this drug in its "preferred brand" pricing level and charges a copay of $43 a month in the initial coverage period. But this drops to $32.59 a month in the doughnut hole (50 percent of the drug's full price plus a small dispensing fee).
How to tell whether your medications will cost less
Certainly, not all brand-name drugs in all Part D plans are going to cost less in the doughnut hole, even with the 50 percent discount, than they did earlier in the year when fully covered. The vast majority, in fact, still cost more in the gap.
Whether or not you get lucky — as the person who asked this question did — depends on these factors:
- How expensive your drug is at your plan's full price. A drug that costs hundreds or even thousands of dollars a month will almost always cost more in the doughnut hole (even with the 50 percent discount) than any copay.
- What copay your plan requires you to pay for any given drug. The higher the copay, the more likely it is that you'll pay a lesser amount in the doughnut hole after 50 percent of the full price has been deducted, as required by law.
Keep in mind that different Part D drug plans charge widely varying copays — even for the same drug. (The variation among plans is often more than $10 and in some cases can be as high as $100 for a month's supply.) That's why it always pays off to compare plans during open enrollment — Oct. 15 to Dec. 7 — according to the drugs you take. The possibility of one or more of your medications costing less in the doughnut hole is just one more reason to make this comparison.
You can do this by using Medicare's online plan finder. If you enter your ZIP code, the names of each of the drugs you take, their dosage and how often you take them, the plan finder identifies the plan that covers your drugs at the least out-of-pocket cost — including premiums, deductibles, copays and what you would pay in the doughnut hole if you fall into it. Go to Medicare's website and click on "Compare Drug and Health Plans."
In 2012, the doughnut hole begins when you and your plan have spent $2,930 on your drugs since the beginning of the year. If your drug costs are high enough, you get out of the gap when your out-of-pocket costs (not including premiums) reach $4,700 since the beginning of the year. The 50 percent manufacturer discount on brand-name drugs counts toward this limit, even though you don't pay them yourself.
Also of interest: Moving in and out of the doughnut hole. >>
Patricia Barry is a senior editor at the AARP Bulletin.