En español | In any one year, the Part D drug benefit gives you initial coverage up to a certain level. But then in most cases there’s a gap in benefits before coverage kicks in again.
See also: Have a question? Ask Ms. Medicare
This gap, known universally as the “doughnut hole,” is the most criticized and unpopular part of the Medicare prescription drug program.
However, the health care reform law of 2010 is gradually narrowing the coverage gap. From 2006, when Part D began, through 2010, falling into the gap meant having to pay 100 percent of your costs while in it. But now and in the future you will pay much less. It works like this:
- Once your total drug costs (what your plan has paid plus your deductible and copays) exceed a certain amount ($3,310 in 2016; $3,700 in 2017) from the beginning of the calendar year, you are then in the gap.
- While in the gap, in 2016 you pay 45 percent of the cost of brand-name drugs and 58 percent of generic drugs. In 2017, you pay 40 percent and 51 percent respectively. (Fifty percent of the discount on brand-name drugs is paid by the companies that manufacture them, and the rest by the federal government. The discount on generic drugs is wholly paid by the federal government.) In subsequent years, these costs will reduce until, by 2020, you pay no more than 25 percent of the cost of any drug in the gap.
How do I get drugs during the drug coverage gap?
You can continue to get them through your plan at the price your plan has negotiated with the manufacturers, which is usually less than you'd pay retail. Your plan will track your expenses so they count toward the out-of-pocket limit. In the gap, you may find drugs elsewhere that are less expensive than your plan charges. You can buy these if you wish — but, under Medicare rules, only drugs purchased at pharmacies within your plan’s network count toward the limit that gets you out of the gap.
What counts toward my out-of-pocket spending limit?
- Your deductible (if your plan has one);
- Your copays during the initial coverage period;
- Any out-of-pocket payments you make for your drugs while you’re in the gap;
- Fifty percent of the cost of brand-name drugs you buy in the gap (which represents the discount provided by the manufacturer), even though you have not paid full price for them;
- Any payments for your drugs made by a family member or friend, a charitable group or a state pharmacy assistance program.
In all cases, only payments for drugs your plan covers on its formulary (including any “exceptions” you receive) and are purchased from a pharmacy in your plan’s network count toward the limit.
What does not count toward my limit?
- Your plan's premiums;
- Payments for drugs not covered by your plan;
- Payments for drugs bought at a pharmacy outside your plan’s network;
- Payments made by your plan, by an employer, union, federal agency or other group insurer;
- Discounts on brand and generic drugs in the gap that are provided by the federal government;
- The value of free or low-cost drugs provided by a drug manufacturer’s assistance program;
- The value of drug samples provided by a doctor free of charge;
- Any drugs bought from Canada or other foreign countries.
Will it take me longer to reach catastrophic coverage than before?
No. The discounts you get in the gap will not slow you down in reaching low-cost catastrophic coverage. That’s because most of the full cost of brand-name drugs bought in the gap count toward the dollar limit that triggers catastrophic coverage
How do I get these discounts?
You don’t have to apply for them. They will be automatically deducted from the full price of your drugs at the pharmacy where you fill your prescriptions.
Can I delay reaching the gap?
Yes. Using lower-cost drugs will make your initial coverage last longer. Ask your doctor if generics or less-expensive brand-name drugs would work just as well as the ones you now take. Choosing these drugs could also reduce your copays. (For information on how similar drugs compare in effectiveness, go to the Consumer Union’s website.)