Does Medicare Part D still have a donut hole? What you need to know

Until the loophole is closed, Medicare Part D beneficiaries are responsible for 100 percent of prescription drug costs once they meet the spending threshold until they reach Catastrophe Insurance Eligibility. This process leaves many people in financial straits, often having to choose between paying for vital medications or other necessities.

However, eliminating the donut hole doesn’t mean your medications are free after you hit your deductible and out-of-pocket limits. Part D coverage still has several phases — including what Medicare still calls a coverage gap — and coverage amounts and deductibles change every year.

How Part D coverage works

Medicare Part D plans have four parts: Deductible Phase, Initial Coverage, Coverage Gap, and Catastrophe Coverage. Each section is reset every year.

inside deductible stage, you pay 100% of the cost of the drug until you meet the deductible (currently $505).under initial coverage, you pay 25% (or less, depending on your plan) of the cost of any covered brand-name or generic drug in your plan’s formulary.Once you have spent $4,660 (in 2023) on covered drugs, you can enter coverage gap.

Here, you’ll still pay 25 percent of all drug costs until you fully close the previous coverage gap, according to Louise Norris, a health policy analyst. Medical Insurance Resource Network. That gap has been reduced to 25%, equal to what you would have paid under your initial coverage.Once you have crossed the coverage gap, you are in catastrophic insurance.

To make things even more confusing, Norris said, most of the plans are not standard designs. The plan may employ other parameters to determine how to bill you until you hit the coverage gap, such as a fixed copay after the deductible is met, and a 25% coinsurance once the spending threshold is met.

It’s confusing, but understanding the costs incurred during this time will help you better manage your prescription drug budget.

out of the gap

When you’re in a coverage gap, the difference between what you pay for a brand-name drug (25%) and the difference in cost between what your plan pays and the manufacturer’s discount on the drug during that period is applied to your annual out-of-pocket cost. This helps you bridge the chasm. The formula works slightly differently if you are taking a generic drug. You’ll still pay up to 25% of the cost of any drug, but only the amount you pay (not the difference in price) counts toward your overall out-of-pocket costs.

After you spend $7,400 in prescription costs, you enter Disaster Coverage Period.At that point, your cost will drop to 5% of any drug, or small copayment, depending on which is larger. Prescription deductibles for catastrophic coverage also change each year, so it’s something to be aware of, especially if you’re taking expensive medications.

“If you’re on an expensive drug that’s costing you thousands of dollars a month, the portion you’re paying during the coverage gap can quickly add up,” Norris said. “One of the biggest problems we’re seeing in Part D is inertia.” .”

Formularies change, drug prices change, your own prescriptions can change throughout the year, but most people don’t take advantage of the open enrollment period for treatment coverage checkThat includes comparing costs at different pharmacies, Norris said, and they won’t change drug plans even though it might benefit them financially.

However, there is some good news: starting in 2024, Reducing Inflation Act Eliminates the 5% beneficiary coinsurance and copayment requirement above the catastrophic coverage threshold. That effectively limits your out-of-pocket drug costs to about $3,250 for the year, according to the Kaiser Family Foundation.

The law was signed by President Biden in 2022, among other things important regulations Help control Medicare Part D costs. it:

• Limit insulin prices to $35 per month
• Limit annual increases in Part D premiums through 2030
• Expands eligibility for full Medicare Part D Low Income Subsidy benefits to 150% federal poverty line
• Beginning in 2025, Medicare Part D out-of-pocket costs will be capped at $2,000 per year.

For the first time, it allows the government to negotiate prices directly with drugmakers, reducing the cost of the most expensive medicines. Preliminary negotiations are due to begin this year and the savings will take effect in 2026.

drug cost assistance

If you need help paying for your medication, there are several options to help you pay:

• extra help program — This is a government assistance program for people who meet certain income and resource requirements to help pay for your prescription drugs.If you are eligible, you will be automatically enrolled, or you can apply Online through the Social Security Administration website.
• National Drug Assistance Program (SPAP): Many states have SPAPs to help people pay for their drugs. Depending on the plan, you may get help paying your Part D premiums, or it may help offset your prescription drug costs.
• National Health Insurance Assistance Scheme can help you navigate the complexities of Medicare and Medicare Advantage and find a Part D drug plan that fits your needs and budget.
• Patient Assistance Program: Most major drugmakers have programs that offer discounted or free drugs to those who qualify. Some require proof of income or detailed records of drug expenses, so be sure to check the requirements.
• sickness fund: Many charities help support people with a serious disease or condition and may help pay for your medicines.
• Generic Drugs: Ask your healthcare provider if you can substitute a generic drug for a more expensive brand-name drug.If no generic drug is available, you can contact your Part D insurance company and Appeal a Denial of Coverage See if the plan covers your drug.
• Prescription Discount Program And the “best price” strategy: Sometimes, the cost of a drug can be lower if you don’t use insurance or use a discount program to pay for it. However, drugs purchased outside of your Part D insurance plan’s coverage will not count towards your deductible or get you out of the coverage gap.