Senior Health Insurance

Medicare beneficiaries who are insured by a standard Part D prescription drug plan (PDP) and who have large prescription drug expenses will have to pay 100%* of their prescription drug expenses that exceed $2,840 until their expenses reach $6,440. This is called the donut hole.

(The figures in this post apply to those who have the standard Medicare prescription drug benefit plan. There are other variations.)

One can purchase a Part D plan as a standalone policy that can be purchased with or without a Medicare supplement plan. The benefits can also be a part of a Medicare Advantage policy that provides both medical and prescription benefits.

*During 2011 enrollees in Medicare Part D will be given a 50% discount on brand name drugs and a 7% discount on generic drugs for prescriptions received while in the donut hole. This discount is paid for by the drug companies.

This discount does not affect how quickly one moves through the donut hole as only the undiscounted costs are considered True Out of Pocket (TrOOP) expenses.

The 2010 affordable care act affects both Medicare and Medicaid. The health care reform law includes a provision that will reduce the donut hole each year until it is eliminated in 2020.

When prescription costs exceed $6,440 the insured pays either a co-pay or 5% of the cost of the drug. The co-pay can be $2.50 or $6.30.

Medicare Part D Prescription Rebates

During 2010 Part D enrollees who were not eligible or Extra Help received a one-time rebate of $250 if they reached the donut hole. (Extra Help is a low income subsidy available to those who qualify for both Medicare and Medicaid.)