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Medicare Part D Donut Hole is closing in 2020


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Summary:  The Medicare donut hole closes in 2020 and then you’ll pay no more than 25% for covered brand-name and generic prescription drugs.

You may have heard that the Medicare “donut hole” is closing and wondered what that meant. The Medicare donut hole refers to a stage in Part D prescription drug coverage.

Part D and the Medicare donut hole

If you have Medicare Part D prescription drug coverage, your out-of-pocket costs may change during the year. This is because Medicare Part D has 4 coverage stages. The stage you are in will determine how much you pay for your covered prescription drugs.

Part D Coverage Stages

Three of these stages–the annual deductible, initial coverage, and catastrophic coverage—may be familiar to you. They are common features of health insurance. But the Medicare donut hole is particular to Part D prescription drug coverage.

Prior to 2011, most people with Medicare Part D paid 100% of prescription drug costs when their expenses exceeded the initial coverage limit. This lasted until they reached catastrophic coverage. This gap became known as the donut hole because it was surrounded by coverage stages in which the Medicare Part D plan paid a large portion of the prescription drug cost.

In 2012, the Affordable Care Act (ACA) took measures to close the donut hole in Part D Prescription Drug plans. The goal was to limit Part D plan member’s cost to 25% of the cost of the prescription drugs. Over the next several years, people with Medicare Part D coverage who reached the donut hole paid less for their medications because of drug manufacturer’ discounts Medicare arranged for the donut hole. And Medicare Part D plans began picking up a portion of the prescription drug cost in the donut hole.

What you can expect when the Medicare donut hole closes in 2020

Brand Name Prescription Drug Savings Generic Prescription Drug Savings

Source: Centers for Medicare & Medicaid Services. Closing the Coverage Gap. Dec. 2017.

Some tips to help you avoid the Coverage Gap (Medicare donut hole)

Even though the Medicare donut hole closes in 2020, you must pay your portion of the cost of covered prescription drugs if you reach the Coverage Gap (Medicare donut hole) stage. This can be as much as 25% of the prescription drug cost. There are a few things you may be able to do to lower your prescription drug costs and avoid reaching the Coverage Gap.

  • Talk to your doctor about prescribing generic medications. Generic medications are usually much less expensive than their brand-name counterparts. This will slow your progression toward the Medicare donut hole.
  • Check to see if your Medicare Part D plan has preferred pharmacies in its network. Preferred pharmacies usually provide added savings on prescription drugs for people in the plan. Using preferred pharmacies when available will slow your progression toward the Medicare donut hole.
  • Use your plan’s Medication Therapy Management (MTM) program. Medicare requires every Part D prescription drug plan to have an MTM program. With MTM, a pharmacist, doctor, or health care professional gives you a free consultation on your list of medications and may even suggest methods for lowering costs. To see if you’re eligible for the MTM program, contact your Medicare Part D Prescription Drug plan.
  • See if you qualify for Extra Help. Extra Help is an assistance program that subsidizes prescription drug costs for certain people who have Medicare. If you are under a specified income level, you may qualify for Extra Help—in which case the donut hole doesn’t apply. You can check with your local Social Security Administration office to see if you qualify.
  • If you are taking an expensive brand name medication, check to see if the prescription drug manufacturer offers a discount program you could participate in to reduce your cost.
  • Compare Medicare Part D plans during the Medicare Fall Open Enrollment Period. Make sure that you are choosing the plan that provides the best coverage for the medications you take. Remember, copayments, coinsurance and deductibles vary among plans. The prescription drug formulary (list of covered medications) varies by plan as well. Be sure to check that your medications are covered by the plan.
  • Be on the alert for Medicare Part D plans that extend coverage for the Medicare donut hole stage. While all Medicare Part D plans must cover at least the minimum coinsurance set by the federal government during the donut hole stage, they may extend additional coverage.

You can learn more about Medicare Part D plans in your area by typing in your zip code on this page.

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