Medicare Donut Hole – Eat It or Does It Eat a Hole in Your Pocket?

by Phil C. Solomon on December 25, 2012

in Medicare

Closing the Medicare Donut Hole

Medicare Donut HoleSo what is this crazy donut hole? The donut hole is the coverage gap when payers can reduce their part D drug coverage once they meet certain spending thresholds. Consumers make up the difference until their spending reaches the catastrophic level. This is similar to meeting a high deductible in traditional insurance coverage.

The donut hole can have catastrophic financial effects for some patients. When it becomes a choice for a patient to pay for their drugs or pay for their rent and utilities, it can become a life or death proposition.

Under the affordable care act, as detailed on the site, the changes to the donut hole are more complex than choosing multi-colored sprinkles or chopped nuts on your glazed donut. They are as follows:

  • Enter the part D donut hole and receive a one-time, $250 rebate check.
  • Starting in 2013, patients will see reductions in brand-name Part D prescription drugs.
  • By 2020, the coverage gap will be closed, meaning there will be no more “donut hole,” and patients will pay 25% of the costs of drugs until they reach the yearly out-of-pocket spending limit.
  • Patients will receive continuous Medicare Part D coverage for prescription drugs as long as they are on a prescription drug plan.

We American’s are fanatical about coming up with interesting names and acronyms, however, who came up with this donut hole theme? It must have been someone with food on their mind. Regardless, healthcare providers need to know the intricacies of this cost reduction program from Medicare.



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