More about the Medicare Donut Hole

I found this article that better explains the Donut Hole. I have to tell you, I am quite disturbed by this, not just for me, but for every person who is on Social Security. These are individuals who worked hard during their lifetime, but could not continue to work any longer. In my case, because of the size of my husband's employer, I have no choice but to have Medicare, I am not eligible for private insurance. So, for those of you who are healthy now, this is what you have to look forward to when you retire; the time in your life when you will need health care coverage more than you ever have before. I can only speak for myself, but I think this is a true injustice to our elderly and disabled! I would love to hear your thoughts, please don't worry if they are different than mine, I really would like to hear all sides.

Medicare Part D: Understanding the Medicare Part D Donut Hole

Learn About the Medicare Part D Coverage Gap
By Michael Bihari, MD, About.com Guide
Updated December 25, 2009

Hitting the Donut Hole

The donut hole, or coverage gap, is one of the most controversial parts of the Medicare Part D prescription drug benefit and of concern to many people who have joined a Part D drug plan.

Although all prescription drug plans must explain the coverage gap in their literature and advertising, the donut hole comes as a shock to many enrollees when they go abruptly from making copayments for their drugs to paying 100% of the cost.

In addition, you may be confused about the $2,830 limit for 2010 in your initial coverage period, thinking it is the only amount of money you would have to pay out-of-pocket. In fact, the amount includes the total cost of your drugs, meaning what you paid plus what the prescription drug plan paid.

How the Donut Hole Works in 2010

This is the standard Part D drug prescription plan for 2010 required by Medicare.
If you join a Medicare prescription drug plan, you may have to pay up to the first $310 of your drug costs. This is known as the deductible.

During the initial coverage phase, your drug plan pays 75% of the covered prescription drug costs after your deductible is met, and you pay 25% until the total drug costs (including your deductible) reach $2,830.

Once you reach $2,830 in total drug costs, you will be in the donut hole and you must pay the full cost of prescription drugs until your total out-of-pocket cost reaches $4,550. This annual out-of-pocket spending amount includes your yearly deductible and copay amounts.

When you spend more than $4,550 out-of-pocket, the coverage gap ends and your drug plan pays most of the costs of your covered drugs for the remainder of the year. You will be responsible for a copay of $2.40 for each generic drug and $6.00 for other drugs (or 5%, whichever is higher, so, for me, a $2000 drug will cost $100 even after I have paid out the $4550). This is known as catastrophic coverage.

The expenses outlined above only include the cost of prescription medications. It does not include the monthly premium that you pay to the prescription drug plan.

It is important to understand that your Part D prescription drug plan may differ from the standard Medicare plan only if the plan offers you a better benefit. For example, your plan can eliminate or lower the amount of the deductible. And, your plan can pay for generic or brand name medications in the coverage gap.