Insurance to cover the Donut Hole in Medicare Part D does not exist. There is no Donut Hole insurance policy that you can buy just to cover the higher expenses during the coverage gap.
Many people out there are upset to learn this, but there’s some good news. First, about 81% of Part D enrollees never reach the donut hole in the first place. (Per a 2009 study by the Kaiser Family Foundation).
Second, the Donut Hole is also shrinking every year due to legislation.
Lastly, there are ways to reduced spending on Part D even without donut hole insurance.
(Not familiar with the coverage gap? Read this post of mine first and then return here.)
Why the Donut Hole Was Created
Congress designed Part D purposely to include a gap in the middle. They did so because Medicare itself foots almost 90% of the cost of Part D.
Think about it… you can buy a drug plan right now in many states for under $20/month. This plan will include brand-name drugs that often cost the insurance company over $200. Yet they only charge you a copay of $45 or so in many cases. On the surface of that, the insurance company should go bankrupt, but they don’t. It’s because Medicare pays them to offset the cost of providing these drugs to you.
On the surface of that, the insurance company should go bankrupt, but they don’t. It’s because Medicare itself pays them to offset the cost of providing these drugs to you.
So MEDICARE itself needed a way to make sure that the people would help to keep costs low. The coverage gap accomplished. The gap encourages people to use generics wherever possible. It encourages them to keep their costs down so that they avoid falling into the gap. The result is they also help to keep costs down for the Medicare program itself and for the American taxpayer.
The gap encourages people to use generics wherever possible. It encourages them to keep their costs down so that they avoid falling into the gap. The result is they also help to keep costs down for the Medicare program itself and for the American taxpayer.
It’s very easy to run a Part D drug analysis on Medicare’s website and find out whether or not your current medications will cause you to enter the gap. This will help you to plan with your doctor as to which medications you can afford.
The Donut Hole is Closing
Furthermore, with the passage of the Affordable Care Act, beneficiaries now get significant discounts on drugs in the gap. Brand name drugs in 2017 are discounted by 60%, and generic medications will have a 49% discount. In 2018, brand-name drugs will be discounted 65%.
This in itself is sort of like insurance to cover the donut hole. If you are only paying 40 – 45% of the cost of a brand name drug in the donut hole, you are paying the lesser share while your Part D company is covering the greater share.
Exception for People on Low-Income Subsidy for Part D
People who qualify for Medicare’s Extra Help for Part D do not experience the gap. Their lower income qualifies them for lower premiums for their drug plan.
They also pay only copays on their medications, even in the gap. Those copays are always 5% or less than the total cost of the medication.
Finally, the coverage gap is slowly closing under the ACA legislation. The discounts on medications in the gap will continue to get larger. By 2020 it is expected that seniors will pay no more than 25% of the cost of their brand name drugs in the gap.
What remains to be seen, however, is how much this measure will drive up the cost of the popular Part D prescription plans.
If you need assistance with applying for the Low-Income Subsidy, give us a call to learn more. If you want help to find the Medicare Part D drug plan that gives you the lowest costs for your medications, don’t hesitate to give us a call.
Lower Part D Costs by Shopping your Plan
While specific insurance to cover the donut hole is not available, our friendly agents help our Medigap policyholders save money on Part D all the time. We can help you with an analysis of your medications each year so that you enroll in the drug plan that will save you the most money.
It’s not uncommon for us to find $500 per year in savings for our clients by helping them shop for a more suitable drug plan for the following year.