In efforts to make Medicare prescription drug coverage more accessible for seniors, the Affordable Care Act (ACA) is phasing out the coverage gap, while increasing benefits for Part D recipients who are in the gap, also called the “donut hole”. The goal is to eliminate the coverage gap completely by 2020, making it easier for seniors to obtain the medicines they need. Here’s some important information on Part D cost sharing and what you can expect with your prescription drug plan.
The Coverage Gap Explained
If you’re new to Medicare prescription drug coverage and unsure what the coverage gap is or how to recognize when you’re in it, here’s a brief explanation. The coverage gap applies to both stand-alone Medicare prescription drug plans and Medicare Advantage prescription drug plans. Basically, Medicare agrees to pay a specific amount for certain drugs. Once you’ve reached the limits outlined on your plan, you are required to pay more out-of-pocket for the same medications.
This is the coverage gap or “donut hole”. Your monthly explanation of benefits should detail how much you’ve spent under your plan, and how much more you have to go before you reach the limit. You are no longer in the coverage gap when you reach your yearly out-of-pocket drug costs.
Some Medicare recipients will not pay increased drug costs while in the coverage gap because of one of the following:
- Prescription drug costs never reached the initial coverage limit
- They qualify for federally funded Extra Help
- An existing prescription drug plan includes additional coverage during the coverage gap
The Medicare Coverage Gap Discount Program– Phasing Out the Coverage Gap
Luckily, if you are currently enrolled in a Medicare prescription drug plan or a Medicare Advantage plan that includes prescription drug benefits, you qualify to receive additional savings once you’ve reached the coverage gap for both generic and brand name drugs until gap is phased out completely in 2020.
Once you reach the coverage gap, you pay 45 percent of your plan’s cost for covered brand name drugs, and 65 percent for generic drugs (Medicare assumes the remaining cost). Each year until 2020, the percentage you pay will reduce until it reaches 25 percent for both brand name and generic drugs in the coverage gap.
How Will the Coverage Gap Close?
Companies who manufacture drugs for Medicare recipients must participate in the Medicare Coverage Gap Discount Program. As a result, Medicare can ensure the coverage gap will close by 2020 by maintaining the 50 percent discount offered by drug manufacturers as well as increasing coverage provided by Medicare drug plans.