Donuts are great—they’re delicious and tasty treats. The donut hole—which many senior citizens citizens in the U.S. find themselves falling into—is not great. What exactly is the Medicare donut hole? Well, let’s back up and first talk about Medicare.
If you’re a legal citizen in the U.S. who pays into the social security system for a minimum of 10 years, you’ll become eligible for Medicare, a federally funded insurance program, after you turn 65. Essentially, that means the government will cover your healthcare costs. Medicare is especially useful for retired senior citizens who no longer receive insurance through their jobs. But, of course, there’s a catch… or two.
The largest problem people on Medicare face is the donut hole, or the coverage gap. The donut hole forms when a Medicare plan places a cap on what the government is willing to cover for medication. This could mean hefty price tags at the pharmacy counter for people covered through Medicare.
How does the Medicare donut hole work?
The first thing to know is that the donut hole won’t affect everyone—those at risk of getting shorted by the coverage gap are mainly Medicare members with a Part D plan, which is sometimes referred to as PDP. A Part D plan can be selected to provide coverage for individual prescription drug needs, but because of the nature of the plan, patients can expect to run into a coverage gap after spending a set amount on covered prescription drugs. Above and beyond this total (which changes year-to-year), the member is responsible for a higher percentage of out-of-pocket drug costs.
Let’s say, for example, you just enrolled in a Medicare Part D plan. At the onset, you pay 100% of all drug costs until you fulfill your deductible, which could be set as high as $415. Then, you’re responsible for either paying a percentage of your coinsurance or a fixed amount copayment on the total cost of your prescriptions—and your Part D plan will cover the rest.
However, once both the costs you pay out-of-pocket and those covered by your plan reach a combined total of $3,820 on covered drugs, you enter the dreaded donut hole. You will now be responsible for 25% of costs for brand-name drugs and 37% of generics until you hit your yearly out-of-pocket spending limit of $5,100. Once you hit that limit, you’ll be in what’s considered “catastrophic coverage,” and your plan will cover 95% of drug costs for the remainder of the year.
So to put it simply, the left side of the donut is the sweet part where you’re only paying coinsurance or copayment, the donut hole is where you must pay higher premiums without as much coverage, and the right side of the donut is when you jump back up to the treat of lower costs.
In this scenario, it’s easy to see how the donut hole can quickly throw many Medicare subscribers into financial turmoil. No senior citizen should have to make the choice between food, rent, and prescription drugs.
How can I avoid the coverage gap?
There are a number of ways for Medicare Part D members to avoid falling into the donut hole. One option is to apply for the Medicare Extra Help program, which is designed to aid those who meet specific income limitations. If qualified, you wouldn’t pay premiums or deductibles and would be responsible for no more than $8.50 for each drug covered.
While Extra Help, a low-income subsidy, is helpful for many—not everyone qualifies. There are a couple other options, including State Pharmaceutical Assistance Programs, Patient Assistance Programs through various drug companies, and free pharmacy discount cards, such as SingleCare.
SingleCare provides members up to 80% off prescription medications. It’s easy to search for your drug before going to the pharmacy to see what the savings would be; then when you pay for drugs during the donut hole, you are saving on out-of-pocket costs. Plus, there may be times when the SingleCare cash price is even lower than your coinsurance even before you hit the donut hole. Best of all, SingleCare is free to use—and always will be.