Right now, Medicare Part D coverage applies to the first $2,970 of retail prescription drug costs for a Medicare recipient with a Part D plan. This included the portion paid by the recipient in the form of deductibles and coinsurance/copays as well as the portion covered by the insurance company. Once the recipient hits $2,970 in Rx costs, he/she enters the “donut hole.”
Before 2012, the recipient would then be responsible for 100% of their prescription costs until they reached a total out-of-pocket Rx limit of $4,700 and they exited the donut hole. After this limit is met, a recipient enters a “catastrophic coverage” period where they will pay only a small coinsurance % or copay for prescription drugs.
Starting in 2012, Health Care Reform implemented rules to “close” the donut hole coverage gap. For 2013, during the donut hole, recipients will only have to pay 47.5% of their brand name Rx costs and 79% of generic Rx costs. These percentages lower each year until you would only be paying 25% of both brand name and generic drug costs during the donut hole in 2020. Keep in mind that only the portion paid by the recipient during the donut hole will count towards the $4700 maximum out-of-pocket limit needed to get out of the donut hole.
By: Liz Kennon