You can go to Dunkin Donuts and get a delicious donut hole for about 25 cents.
If you eat the Medicare donut hole it is going to cost you $4350.
In this article I am going to explain: the deductible, the initial coverage limit, the Medicare donut hole, the catastrophic coverage threshold, and what you can expect to pay for prescription drugs in 2009 if you are on Medicare.Subscribe to The Alzheimer's Reading Room--via Email
The initial phase of Medicare coverage includes the first $2700 of drugs consumed in a calendar year. When you are within the initial coverage limit you pay for the first $295 of drugs you consume--the deductible. Then, you pay 25 percent of the next $2405.00 ($2700 less the $295 deductible) of prescription drug purchased.
Here is the math and what you will pay:
Keep in mind when calculating the $2700 initial coverage phase cost your deductible and co-pay are included in the amounts. So in the initial phase you can expect to pay $896.25 and Medicare covers the additional $1803.75.
If the total dollar amount of drugs you consume is less than $2700 then your cost is capped at $896.25 (it can be less, this is the max for this phase). This calculation assumes the drugs you are taking are covered by Medicare. There are certain drugs that are not covered.
Once you exceed the initial coverage limit you enter the so-called Medicare donut hole. This means you pay 100 percent of the cost of prescription drugs purchased and Medicare pays $0 (zero). This phase of coverage should be called the empty hole. Why? Well if you look at a donut and take a good hard look at the area called the hole you will notice there is nothing there. In the case of Medicare, once you enter this phase you are on your own and you pay 100 percent of the costs. You can go to Dunkin Donuts and buy donut holes they are very tasty. You can also buy supplemental prescription drug coverage to help reduce the cost of the Medicare donut hole-- not so tasty.
Here is the math if you max out the donut hole coverage and before you get catastrophic “threshold” coverage. You pay:
- $295 (the Medicare Deductible)
- $601.25 (your share of the initial coverage)
- 100 percent of the next $3,453.75 ($6,153.75 minus the $2700 initial coverage phase) or $4350.
Catastrophic coverage as you can see begins at $6,153.75 and after you spend out of pocket--$4350. I hope this clears up the difference between catastrophic coverage threshold and catastrophic prescription drug coverage. There is good news once you exceed the Medicare catastrophic coverage threshold you will pay five percent co-pays on all drugs purchased. Of course, you will pay less if you don't have to pay for an entire donut hole at your local pharmacy.
My mother, Dorothy, is 92 years old and suffers from Alzheimer's disease, high blood pressure, hypothyroidism and high cholesterol. She takes two drugs that by themselves send her into the donut hole--Obama Laying the Groundwork for U.S. Health Reform. I wrote previously about how Medicare pays full retail for the drugs it purchases on behalf of Medicare recipients. In other words, they pay the same as an individual would pay if they walked in the door of a pharmacy and purchased the drugs for themselves. Make sense to you? Oh, and by the way, Medicare is the largest purchaser of those two drugs in the world. I guess all the politicians in Washington felt that the transfer of our tax dollars to drug companies at 100 percent retail price was a good thing. Or maybe they benefited by doing so. I'll let you decide.
I hope President-elect Barack Obama and Tom Daschle will address this issue. If they want to put money in the pockets of consumers this would be a good way to do it. I feel certain many of those in the donut hole would put this money to work in the economy immediately. At least, they might be able to afford a donut.
If you are over 65 and on Medicare you could also consider joining a Medicare HMO. My mother is a member of Humana Gold Plus and she does pay less during the initial phase. However, unless you are well below the recognized poverty level or live in a state that helps at a low threshold of income you will find it difficult to escape the donut hole.
I intend to write more about this soon.
If you would like to get your voice heard on health reform go to Change.gov. You can enter your ideas into a simple form and submit it. If you have extra energy you might email your congressperson or United State's Senator and ask them to explain why Medicare pays full retail for prescription drugs. I am sure we would all like to hear the answers.
Seniors Still Mystified By Medicare’s Drug ‘Doughnut Hole’
Posted By Victoria E. Knight
Almost two-thirds of enrollees in Medicare Part D don’t fully understand the concept. More alarmingly, more than one-in-four either don’t know what the coverage gap is or how it works, according to a national survey of 1,000 Medicare Part D participants done for Medco Health Solutions, the big manager of pharmacy benefits.
In case you were wondering about the dimensions of the doughnut hole these days. The coverage gap will open up after beneficiaries and their drug plans have spent a total of $2,700 on medications in 2009. Seniors are then on the hook for the next $4,350. After that, the drug plans picks up most of the tab.
Unfortunately, three-quarters of enrollees mistakenly believe that only their out-of-pocket costs count towards the first $2,700, when in fact they need to factor in the health plan’s contributions as well, according to the Medco study.
“This misunderstanding gives many seniors a false sense of security that the coverage gaps is months away, when it reality, it could hit them with their next refill,” Richard Dupee, president of the Massachusetts Geriatric Society and chief of geriatrics at Tufts Medical Center, told the Health Blog. “Without knowing how the coverage gap works, it’s simply impossible to takes steps to push off or prevent it.”
The WSJ has tips on how to become a doughnut-hole dodger as well as advice on what to look for in coverage this open enrollment season (you have until Dec. 31 to decide). Perhaps unsurprisingly given the study’s findings, Medco, which offers Medicare Part D plans, has just launched a new web site “What’s Your Gap?” with its suggestions on how seniors can save.
Almost three years since the addition of drug coverage to Medicare, seniors remain confused about the infamous coverage gap known as the “doughnut hole.”
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