Expert Q&A: What's the deal with the doughnut hole?
Many of you have sent in questions about how the new health care law will affect you and your family. We’ve compiled answers for select questions to our experts in a short series to help you navigate changes to the health care system. Here's the latest:
Question: What is the future for the doughnut hole for medication for people on Medicare?
Answer: When the Medicare Part D prescription drug program was created, it included a gap in coverage known as the “doughnut hole.” The basic Part D benefit charges a deductible and 25 percent coinsurance for prescription drugs up to an initial coverage limit (in 2010, that’s the first $2,840 in total drug costs). After that point, beneficiaries fall into the doughnut hole. Prior to the passage of the Affordable Care Act, while beneficiaries were in the doughnut hole, they were responsible for the full cost for medications until total prescription drug costs reached $6,440. After that point, beneficiaries enter catastrophic coverage. They are required to pay only 5 percent of their covered drug costs, or $2.50 for generics or $6.30 for name brand drugs.
The Affordable Care Act makes significant improvements to the Medicare Part D program in order to make prescription drugs more affordable for beneficiaries who reach the doughnut hole. In 2010, beneficiaries who reach the coverage gap receive a one-time $250 rebate check. In 2011, beneficiaries in the doughnut hole will receive a 50 percent manufacturer’s discount on brand name drugs. They will also receive increased coverage for generic drugs—plans will pay 7 percent of the cost of generic drugs. In later years, the discounts and coverage will increase until the doughnut hole is completely closed. When the gap is closed, beneficiaries will only be responsible for the standard 25 percent coinsurance payment while they are in the doughnut hole, rather than the full 100 percent they were paying prior to the Affordable Care Act.
For some helpful resources that provide more information about the Medicare Prescription Drug program, please see Welcome to the Medicare Prescription Drug Program for 2001 (http://www.familiesusa.org/assets/pdfs/health-reform/2011-Prescription-Drug-Doughnut-Hole.pdf) and The Medicare Drug Benefit: How Much Will You Pay? (http://www.familiesusa.org/assets/pdfs/health-reform/2011-Prescription-Drug-Doughnut-Hole.pdf). People with limited incomes and resources should also see if they are eligible for Extra Help by visiting the Social Security Administration website, www.ssa.gov/prescriptionhelp. Finally, some states have state-run prescription drug assistance programs that can provide additional assistance.