The donut hole in Medicare drug coverage refers to the gap in coverage that most Medicare recipients experience if they have a drug plan. Although it sounds a bit appetizing, ala Krispy Kreme or Dunkin’ Donuts, it can be as bad for your health as donuts -- and this donut hole definitely leaves a sour taste in your mouth.
Here’s what happens: as a part of your drug plan, you pay a yearly deductible, coinsurance or a co-payment, and whatever the prescriptions cost. Your plan covers the rest of the cost of the drugs. However, there is a limit. Once you and your plan have paid a certain amount of money for covered drugs, you will have to start paying the total cost of the drugs out of pocket.
You’ll know if you’ve fallen into the donut hole when you examine (yes you may need a PhD in decoding) your Explanation of Benefits (EOB) statements. Each month, your Medicare drug plan mails an EOB detailing how much you’ve spent on covered drugs and any gaps in coverage.
Luckily, the Affordable Care Act has created some provisions to minimize these coverage gaps. Starting in 2011, if you hit your limit, you will receive a 50% discount on covered brand name drugs and a 7% discount on covered generic drugs. Each year between 2011 and 2020, there will be additional savings so that donut hole is completely sealed by 2020.
For more information on the donut hole, contact your prescription drug plan, or Medicare at 1-800-633-4227 or www.medicare.gov.