Filling the Medicare Part D "doughnut hole"
October 09, 2009
Nearing retirement? Among the many changes to be aware of, and perhaps plan for, is something called the Medicare Part D "doughnut hole." Above a certain threshold, Medicare's coverage of monthly spending on prescription drugs drops to zero, only to kick in again beyond a higher, so-called "catastrophic" threshold.
Not heard of the doughnut hole? Can't make sense of it? You're not alone. As of late 2008, nearly two-thirds of enrollees in Medicare Part D did not fully understand the coverage gap, according to a poll funded by Medco Health Solutions, a $44 billion manager of pharmaceutical benefits.
How big is the coverage gap? What are the payment thresholds? What can a retiree do about it? Unfortunately, there are no easy, one-size-fits-all answers, if only because each of the many dozens of Medicare-related drug plans currently available has its own peculiar set of criteria, premiums, and coverage options. And what's more, as one of the hot buttons in the current debate over health care reform, the rules governing Medicare Part D are in flux. Indeed, the Obama administration recently disclosed its specific intent to partially close the doughnut hole"but not before 2010, at the earliest.
Here are the basic facts (as of 2009): As long as a retiree's total drug spending remains at less than $295, Medicare offers no coverage. From $295 to $2,700, Medicare covers 75 percent, and then from $2,700 to $6,154, coverage drops to zero again. Above $6,154, coverage maxes out at 95 percent.
What should be clear is that potentially serious amounts of money are involved, and the best advice for anyone who is or may soon be affected is to read up, learn, and be prepared. There is a great deal of useful information available on the Web"from both private sources and government agencies. A good place to start is the Medicare Web site that provides a wealth of data, including details about seemingly all of the defined-benefit drug plans available in each state and county in the nation.
Beyond that, here are some facts and strategies to keep in mind:
"¢ Switching to generic equivalents can often cut drug spending considerably. Medicare's rules are such that generics generally enjoy much higher coverage than the brand-name drugs that pharmaceutical companies spend so much on advertising to consumers and promoting among doctors.
"¢ Buying from mail-order pharmacies is another way to cut spending, especially when caught in the doughnut hole. And buying from Canadian mail-order houses is proving even more beneficial. For instance, instead of paying $315 for a 90-day supply of Crestor, a cholesterol medicine, a consumer might switch to generic equivalent available in Canada"at CanadaDrugs.com, for instance"for just $146.
To close the gap, retirees can explore several additional sources that offer financial assistance. Currently, there are 21 states and one U.S. territory participating in the State Pharmaceutical Assistance program, which provides help in covering drug plan premiums and other costs. In addition, national and community-based charitable organizations may be able to kick in assistance, as will certain pharmaceutical providers.
The bottom line: There is coverage available to fill the "doughnut hole," but the onus is on retirees to build the bridge that fills that gap.
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