Beware the Donut Hole, I’ve heard, but what is it and why don’t people like it?
It is a temporary limit on what your drug plan will cover.
You pay more!
Insurance companies pay 75% of standard medications like those for blood pressure, heart disease and other common ailments. Once you reach a certain monetary level, you, the patient, are required to pay a higher percentage.
The intent is to prevent overprescribing and overconsumption.
If you have to pay out of your own pocket, you might think twice about your prescriptions.
Why the Donut Hole?
The idea of the donut hole is to have seniors pay part of the cost of their medications and decrease overspending and overutilization of prescription drugs. It would give seniors an incentive to use less expensive generic drugs and shop for better prices. It also prevents drug companies from being able to charge astronomical prices that seniors couldn’t afford, but that Medicare would have to pay.
Donut Hole Details
- Once you and your insurance company have paid a combined amount of $3,700 for covered drugs during 2017, you enter the donut hole and the percentage of your coverage decreases. What you now pay increases.
- Once in the donut hole, your coverage decreases but you will pay no more than 40% of the cost of brand name prescriptions and 51% on generic drugs until you reach an out-of-pocket amount of $4,950. This will get you out of the gap or donut hole.
- Once you reach $4,950, you enter the catastrophic coverage phase. Here the amount you pay goes down to a small percentage, about 5% – or about a $6.60 co-pay – for your prescriptions.
Decreasing the Donut Hole
The percentage you pay for both brand name and generic drugs while in the donut hole is slowly decreasing. It will go down to 25% in 2020. While some applaud this measure, others see it as an open door to wasteful spending.
What do you think? Have you been affected by the Donut Hole? Leave a comment below. I’d like to hear what you think.
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