Although it may sound sweet, the doughnut hole in Medicare’s prescription drug coverage can feel like a trap to those who fall into it. If you or a family member is covered by Medicare, you should familiarize yourself with the coverage gap, nicknamed the doughnut hole. In general, 20 to 30 percent of Medicare members end up in the doughnut hole.
Visualize a doughnut: You have a left side, a hole in the middle and a right side.
Left side: You stay on the left side of the doughnut until your payments and your plan’s payments reach $3,700* on covered prescription medications. This is not only what you pay personally at the pharmacy; this is the total of your drug costs plus your deductible and copays.
Hole in the middle: Once you reach $3,700 in drug costs this year, the doughnut hole phase of your Medicare plan begins. You remain in the doughnut hole until your True Out-of-Pocket (TrOOP) costs reach $4,950*. TrOOP includes the drug costs paid by you plus the 50 percent discount on brand-name drugs provided by the drug manufacturer.
Right side: Once you leave the gap, by meeting the TrOOP threshold, catastrophic coverage kicks in and your plan will pay 95 percent of your remaining costs for the remainder of the calendar year.
In 2020, the coverage gap will close and the doughnut hole will disappear.
Staying out of the doughnut hole
No one wants to spend unnecessary money on prescription drugs. To try to keep yourself out of the doughnut hole, Judy Mai, pharmacy benefits specialist for Sharp Health Plan, offers a few tips:
- Switch to lower-cost drugs. Talk to your doctor about using generic or over-the-counter drugs.
- Take advantage of mail-order prescription drug programs. Check to see if using a mail-order pharmacy for a three-month supply of maintenance drugs may lower your copayments.
- Shop around and compare prices via retail and online stores.
Always pay attention to your monthly health insurance statements to know how close you are to entering or exiting the doughnut hole. You will keep yourself financially prepared to incur these costs.
For those interested in learning more about health insurance, HICAP offers free one-hour individual counseling sessions. The counselors offer unbiased, impartial information on Medicare and supplemental and long-term care insurance. Various dates are available October to December 2016.
*These are the costs for 2017.