You may have heard the term “donut hole” when it comes to Medicare, but what exactly is it? A donut hole is a coverage gap that occurs once you reach a certain level of expenses in a calendar year. In 2022, the donut hole will be eliminated, but until then, here’s what you need to know about it. This blog post will give you an overview of the donut hole and how to avoid it.
How Does Medicare Prescription Coverage Work?
Original Medicare (Parts A and B) covers many of your medical expenses, but it doesn’t cover all of them. For example, it doesn’t cover most prescription drugs. To get help with the costs of prescription drugs, you can sign up for a separate Part D plan.
Most Part D plans have a coverage gap, also called the “donut hole.” This is a temporary limit on what the plan will pay for your drugs.
Private insurance carriers approved by Medicare offer prescription drug plans. Plans can vary in both cost and the medications covered. It’s a good idea to compare different plans to find the right one for you.
Prescription drug plans feature formularies, which are lists of covered medications. Some formularies have tiers in which some medicines are more expensive than others. For example, medications in one tier might have a $25 copayment, while another tier might have a $40 copayment.
What Number Do You Need to Hit the Donut Hole for 2022?
To hit the donut hole in 2022, you would need to have reached $4850 in total drug costs. At this point, you are responsible for 25% of your brand-name drug costs and 37% of your generic drug costs. These out-of-pocket expenses continue until you reach $7300 in total drug spending for the year.
What Comes After the Donut Hole?
Once you have reached $7300 in total drug spending for the year, you enter what is called the catastrophic coverage phase. In this phase, you are responsible for a small coinsurance or copayment for your medications. For example, you might pay $0.35 for a generic drug and $0.70 for a brand-name drug.
The catastrophic coverage phase protects you from very high drug costs. Once you reach this phase, you will no longer have a donut hole.
Keep in mind that the Part D donut hole is scheduled to be eliminated by January 2023. Starting in 2022, you will only be responsible for 25% of the cost of your brand-name drugs in the coverage gap. In 2023, the donut hole will be eliminated.
When is it Time to Switch Your Prescription Drug Plan?
If you find that your current prescription drug plan is no longer meeting your needs, it may be time to switch to a new one. You can do this during the Annual Election Period (AEP), which runs from October 15 to December 7th.
You may also be able to switch plans if you have a life-changing event, such as losing your job or moving to a new state.
I Heard Advantage Plans Have Lower Deductibles! Is This True?
Yes, it’s true that Medicare Advantage plans typically have lower deductibles than Original Medicare. However, this isn’t always the case. It’s important to compare the deductibles of different plans before you enroll in one.
You can learn more about Medicare Advantage plans and compare them to other types of Medicare plans on our website.
How Do I Avoid The Donut Hole with Medicare?
There are a few ways to avoid the donut hole. One way is to enroll in a Medicare Advantage plan that includes prescription drug coverage. These plans typically have lower deductibles than Original Medicare.
Another way to avoid the donut hole is to enroll in a Part D prescription drug plan with a “no-coverage gap” feature. These plans may have higher premiums, but they can help you avoid the donut hole.
You can also avoid the donut hole by using generic drugs instead of brand-name drugs. Generic drugs are typically much cheaper than brand-name drugs.
Finally, you can avoid the donut hole by being a smart shopper. Compare prices at different pharmacies, and ask your doctor if there are cheaper alternatives to the drugs you’re taking.
All of these methods can work to help you avoid spending too much on your medications. If you have any questions or would like us to give you a list of generics that are available within your plan. Give us a call and we would be glad to help you out.
