What You Need to Know About the Medicare Donut Hole in 2019
Whether you’ve been on a Medicare plan for a while or are brand new to Medicare, odds are you’ve heard the term, “Donut Hole” in relation to your prescription drugs. What exactly is the Donut Hole?
The Donut Hole, or the Coverage Gap, refers to the time period where Medicare Members pay more for their prescription drugs than they do during their Initial Drug Coverage stage. At the beginning of each year, Medicare beneficiaries pay their deductible, if applicable, and their copays until the retail cost of their medications reaches $3,820. After this initial stage, Medicare members move into the Coverage Gap stage or the Donut Hole stage.
Retail Costs vs. Copays
The retail cost of a drug and the copay paid at the pharmacy are not the same thing. For example, the retail cost of a drug may be $100 but you may only have to pay a $10 copay. The Donut Hole comes into effect when the retail cost of a drug has reached $3,820, not your copays.
It’s important to know that the retail cost and the copay for each medication varies between insurance companies and Medicare plans. A Medicare insurance agent can help you navigate the specific cost of your prescription drugs and compare that cost to different Medicare Prescription Drug Plans (PDP).
Facts about the Medicare Donut Hole 2019
- The Donut Hole or Coverage Gap stage only refers to prescription drugs. Other doctor visits, copays, or deductibles are not factored.
- You may never end up in the Donut Hole. Depending on the drugs you take and their retail cost, it’s possible you may never reach the point where you have to pay into the Donut Hole.
- Likewise, you may end up in the Donut Hole every year, early in the year, or even late in the year. There’s no set time frame when someone enters the Donut Hole because each medication has its own retail cost.
- Being in the Donut Hole depends entirely on a drug’s retail cost. What you pay at the pharmacy is not the retail cost of that drug but a copay.
- In 2019, Medicare beneficiaries will pay 25% of brand-name drugs while in the Donut Hole.
- In 2019, Medicare members will pay 37% of generic drugs while in the Donut Hole.
Each Medicare Insurance company’s prescription drugs are categorized by tiers. For example, your insurance plan may categorize medications by tiers 1 through 5. What you may not know, though, is that each Insurance company may set up their own category system.
This means with Insurance Company A, a medication may be a Tier 2 drug, but with Insurance Company B, that same medication may be a Tier 3 drug. This is why it’s helpful to speak to a Medicare Insurance Agent. They can look up the medications you’re currently taking and tell you which tiers the different Insurance companies have labeled those medication.
Did you know that an Insurance company can change the tiers and cost of any drug during the year? Your Insurance company is required to give you notice if this happens, and if at any time the cost of one of your medications does change, you can file an exception and get your drug to stay at the tier it was originally in the beginning of the year.
Getting Out of the Donut Hole
Once the retail cost of a drug reaches $5,100, Medicare beneficiaries will only pay either $3.40 for generic drugs, up to $8.50 for brand-name medications or at most, 5% of the retail drug cost. This is called the Catastrophic stage, and it’s the third and final prescription drug stage for 2019.
The Donut Hole won’t Exist in 2020
In 2020, there will no longer be a Donut Hole or Coverage Gap stage for prescription drugs. Medicare Members will go straight from the Initial Drug Coverage stage to the Catastrophic stage.
Because the cost of prescription drugs varies between insurance companies as well as individual Medicare plans, keeping in touch with a Medicare insurance agent is a great way to know what your drug cost for the year will be as well as which plans have the lowest drug cost for you. Caress Insurance Agency has Medicare insurance agents in San Diego County as well as the rest of Southern California. We work with Scripps Affiliated Medical Groups to help answer all your Medicare questions.