It may be hard to swallow but, like it or not, if you are a Medicare recipient and take prescription medication, you’ll likely be in a “Donut Hole” before your coverage becomes catastrophic.
That may seem intimidating but Cameron Kirchoff and Gentry Ferguson of the Texas Medicare Shop in Georgetown*, with 30 years of Medicare insurance experience between them, can help clarify.
In short, the Donut Hole is the coverage gap that occurs after your prescription plan deductibles are met and before catastrophic coverage kicks in. When in the gap, Medicare places a temporary limit on what your drug plan will pay for drugs.
To understand Medicare’s Part D Prescription Drug plan, Cameron and Gentry agree it’s important to be aware of its coverage levels, which run through the calendar year.
- Annual Deductible: Some insurance plans require an annual deductible of the cost of your prescription drugs before the plan’s initial coverage begins. In 2021, the maximum is $445.
- Initial Coverage: Co-payments and co-insurance kick in; you pay your share of prescription costs and your plan pays the rest. When the retail cost of your prescription drugs reaches the 2021 limit of $4,130, you proceed to the next level. Keep in mind, this does not mean you have paid $4,130 out of your pocket; this amount is the drug’s “retail cost” (which may vary between pharmacies), while you pay only a percentage or co-pay.
- Coverage Gap or “Donut Hole”: Your drug plan’s co-pays and co-insurance now go away and you pay 25 percent of the retail cost of all your medications. This is true on all individual Part D prescription drug plans.
- Catastrophic Coverage: You must now reach your True Out-of-Pocket Cost or TROOP ($6,550 for 2021), which is calculated by what you have paid out of your pocket (deductible, copays, and the 25 percent retail cost while in the Coverage Gap). Seventy percent of the retail cost of your medication in the Coverage Gap is also counted towards TROOP.
There are ways you can try to lower your prescription drug costs in order to avoid the “Donut Hole:”
- Ask your doctor if a generic alternative may be substituted.
- Inquire if your drug plan offers discounts on a 90-day supply by mail, rather than the usual 30-day amount.
- Contact the drug company directly—through your doctor’s office or online—to see if they offer discounts through their pharmaceutical assistance program.
- Visit medicare.gov and see if you qualify for a low-income state assistance program.
Of course, you can always shop around for a new prescription plan. Typically, Medicare consultants provide services to their clients free of charge and are compensated by the insurance companies. Texas Medicare Shop is on a mission to educate the Georgetown community and find just the right insurance for their clients from the 35 plans currently offered in Texas.
All Medicare insurance plans are required to send out an Annual Notice of Coverage. The notification of any changes in plan coverage or costs must be postmarked by Sept. 30. Policy changes can only be made during the Oct. 15–Dec. 7 Annual Election Period and go into effect the following January. “Reviewing your drug coverage every October is crucial,” advises Gentry, “This is one of the services we provide to our clients.”