Most medicare prescription drug plans have a “Donut Hole” or also called the “Coverage Gap.”
This is when a person reaches a certain level of coverage within the Part D drug plan ($3,750) and the amount of coverage provided for your brand and generic medications.
A person will only enter the Donut Hole level when you and your drug plan have spent a certain amount for covered drugs. In 2018, once you and your plan have spent $3,750 on covered drugs, you exit the “Initial Coverage Level” and enter the Donut Hole (Coverage Gap) level.
Medicare members who receive extra help from Medicare do need to worry about the coverage gap, they are exempt from this level of heir plan.
When you enter the Donut Hole, you will pay no more than 35% of the plans cost for covered brand drugs. Some plans may offer a slightly higher discount, but all plan must provide at a minimum, the 35% level.
Although you’ll pay no more than 35% of the price for the brand-name drug in 2018, 85% of the price—what you pay plus the 50% manufacturer discount payment—will count as out of pocket costs, which will help you get out of the coverage gap.
in 2018, the Part D drug plan member will be responsible for 44% of the cost of the generic drugs, and your plan will provide coverage for the other 56%.
What you pay for generic drugs during the coverage gap will decrease each year until it reaches 25% in 2020. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
The costs of non-covered drugs do not count towards moving out of the coverage gap.
Donut Hole: $3,750 – $5,000
After the Donut Hole you enter the “Catastrophic Coverage” portion of your plan. This is when a person has spent more than $5,000 in prescription costs. At this time, they will be protected by the Catastrophic Coverage which typically covers 95% of their drug costs for the balance of the year.
All part D drug plans have four levels of coverage; starting with the Initial Deductible ($0 – $405). The deductible amount must first be satisfied by the member before the plan pays for their medication costs. With some generic drugs the deductible does not apply.
The next level of coverage is the “Initial Coverage Level” which starts after the plan deductible has been met, and the plan then pays 75% of the drug costs, while you are responsible for 25% until the total drug costs reach $3,750, then the Donut Hole coverage level starts.
Then after the Donut Hole level, the final coverage is called the “Catastrophic Level.” This portion of your plan. This is when a person has spent more than $5,000 in prescription costs. At this time, they will be protected by the Catastrophic Coverage which typically covers 95% of their drug costs for the balance of the year.
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