Plan D

In general, Medicare Part D prescription drug plans provide insurance coverage for your prescription drugs - just like other types of insurance. If you join a Medicare Part D prescription drug plan, there will be a monthly premium ranging from only a few dollars up to over 100 dollars - depending on the benefits of your Part D plan and your state.

Some Medicare Part D plans have an initial deductible (the amount you pay before the benefit begins) and some Part D plan have no initial deductible or a $0 deductible, providing coverage as soon as you purchase your first prescriptions. Please note, that you may pay a higher monthly premium for Part D plans with no initial deductible.
Finally when you actually use your Medicare Part D plan, your actual prescription costs will vary depending on the particular drug plan you choose.

Your prescription drug plan can be a stand alone plan, or it can be included in a Medicare Advantage Plan (link to Medicare Advantage page).

How does the Donut Hole really work?

The Coverage Gap or Donut Hole has caused a considerable amount of confusion for many people and has even surprised seniors when they suddenly are required to pay the full price of their medications. The following is based on the 2008 Medicare Standard Benefit Plan Model.

Quick Overview

Here is a quick overview of the Donut Hole or Coverage Gap.

• According to the CMS Model Plan, the Donut Hole phase begins when the covered medication costs reach $2510. (some plans begin earlier than this point at perhaps $1,800)
• Please note, this $2510 is the total retail cost of the covered medications, not what you spend personally. As a Part D beneficiary, you will pay only a portion of the $2510.
• In the CMS model plan, a beneficiary; like yourself, pays the first $275 dollars as a deductible and then 25% of the next $2235, for a total out of pocket medication costs of $833.75 (excluding monthly plan premiums).
• The Medicare Part D plan pays the difference or $1676.25.

How do you keep track of the retail costs?

You do not need to keep track of retail costs. Your Part D plan provider will gather together all of the retail costs and watch where you are with respect to the Donut Hole. Your monthly statement should provide you with an overview as you approach the $2510 mark (entry into the donut hole).

What about Medications Purchased Outside the US?

I use medications not covered by my plan or bought outside of the country (in Canada). Are these expenses included in the $2510 or any other Part D calculation?

Nope - medications not included on your plan's formulary (out of formulary drugs) or purchased outside of the US fall outside of your Part D coverage and are not included in the $2510 or any other Part D calculation.

How long do I remain in the Coverage Gap?

Medicare Part D beneficiaries remain in the Donut Hole until their true out of pocket costs exceeds $4050. The $4050 does not include the portion of your prescription expenses paid by the insurance carrier or your monthly premiums.

What happens after I leave the Coverage Gap?

After the Donut Hole, the Medicare Part D beneficiary enters into the last phase of the Medicare Part D program or Catastrophic Coverage. From this point on, the Medicare Part D beneficiary pays $2.25 per month for generics / $5.6 per month for name brand medications or 5% of the medication's retail cost, whichever cost is higher.

How about an example so I can estimate when I enter and leave the Donut Hole?

Suppose an example beneficiary, Mr. Smith, takes an expensive medication such as Betaseron (with an estimated retail cost of $775 for eight 0.3 MG vials per month), he will never pay more than $4050 out of pocket before the Catastrophic Coverage phase of his plan is reached. Assuming Betaseron is the only medication that Mr. Smith uses, he will enter into the Donut Hole in the third month of his plan ($2510 / $775).

Mr. Smith will then emerge from the Donut Hole into the low cost Catastrophic Coverage around the seventh month of his plan ($5726.25 / $775). In this way, Mr. Smith will receive low cost Catastrophic Coverage for the remainder of the year (or approximately five+ months).

During the Catastrophic Coverage phase, Mr Smith's monthly medication costs should be reduced to $38.75 or 5% of $775. Please note: if Mr. Smith enrolled in a Medicare Part D plan where his medications are also covered through the Donut Hole, Catastrophic Coverage may never be reached because Mr. Smith's true out of pocket medication costs would never exceed $4050 (with a plan providing Donut Hole coverage, Mr. Smith would probably pay around 25% of the retail price or 193.75 (assuming this medication is listed as a Tier IV or "specialty" drug) -- twelve months of coverage = $2325 out of pocket cost).

Try this Donut Hole Calculator

For more information please call (203) 237-7900 or click here

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