2006-06-23 / Columnists

Spotlight On Elderlaw

Medicare Part D: The Coverage Gap AKA, 'The Donut Hole'
By Nancy J. Brady, RN, Esq. And Linda Faith Marshak, Esq.

The most difficult part of the Medicare, Part D Drug prescription drug plan is the understanding and getting used to the gap in coverage, better known as "the donut hole." At first glance, and early in the plan, subscribers have a co-payment for their prescriptions that seems fair and financially manageable for most. It comes as a big surprise to a subscriber that when they reach their $2,250 limit of costs (calculated by total drug costs including those costs incurred by their plan plus what the subscriber pays out of pocket) and the subscriber is now responsible for ALL costs until the out of pocket expenses reach $3,600.

To best understand the program, let's look at the intent of the federal government in implementing Medicare Part D into law. Congress designed the program to give seniors assistance with their initial costs of prescriptions, up to $2,250. That part of the program includes co-payments by enrollees. For seniors who are less financially well off, the program provides more generous and comprehensive financial assistance.

Let's examine the program as a three-part plan. In the first part of the plan, for the average enrollee, Medicare pays for drug prescriptions with a deductible and a co-payment on each prescription. In the third phase enrollees pay five percent of all costs of their medications. So what about phase two? That's the "donut hole."

Phase two begins when each subscriber/enrollee has used the $2,250 since joining the program. Generally, this amount includes your deductible, your co-payments and any amount the plan has paid for your medications. It does not include your premiums. This is the part of the program when each enrollee pays one hundred percent of their prescription costs out of their own pocket!

You do not fall into the "donut hole' if the Medicare plan offers full coverage throughout the year; the total costs of all your prescriptions does not exceed $2,250 for the year, you receive assistance because of low income and/or assets or you have additional coverage through an employee or state program.

When do these out of pocket expenses end? The gap ends when you have spent $3,600 out of pocket, excluding premiums. Let's examine what counts toward the $3,600 limit: your deductible; co-payments made during phase one; payments for drugs made by you during the gap/donut hole period; payments made for you by family or friends, charitable groups or state pharmacy programs.

The following does not count toward the $3,600: premiums for drugs not covered under your plan; drugs purchased outside the USA; free or low cost drugs from a manufacturers assistance program or samples from your doctor; payments made by a union, federal agency or other group insurer.

If your income is limited call (800) 772-1213, go to www.socialsecurity. gov , or contact a state pharmacy assistance program by calling (800) 677-1116 or call the Partnership for Assistance at (888) 477-2669.

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