Costs in the Coverage Gap

Most Medicare Prescription Drug Plans have a coverage gap (also called the “donut hole”). This means there’s a temporary limit on what the drug plan will cover for drugs.

Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. In 2015, once you and your plan have spent $2,960 on covered drugs (the combined amount plus your deductible), you’re in the coverage gap. In 2016, once you and your plan have spent $3,310 on covered drugs, you’re in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.

Once you reach the coverage gap in 2015, you’ll pay 45% of the plan’s cost for covered brand-name prescription drugs. You get these savings if you buy your prescriptions at a pharmacy or order them through the mail. The discount will come off of the price that your plans has set with the pharmacy for that specific drug.

Although you’ll only pay 45% of the price for the brand-name drug in 2015, 95% of the price—what you pay plus the 50% manufacturer discount payment—will count as out-of-pocket costs which will help you get out of the coverage gap. What the drug plan pays toward the drug cost (5% of the price) and what the drug plan pays toward the dispensing fee (55% of the fee) aren’t counted toward your out-of-pocket spending.

Example: Mrs. Anderson reaches the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there’s a $2 dispensing fee that gets added to the cost. Mrs. Anderson will pay 45% of the plan’s cost for the drug ($60 x .45 = $27) plus 45% of the cost of the dispensing fee ($2 x .45 = $0.90), or a total of $27.90, for her prescription. $57.90 will be counted as out-of-pocket spending and will help Mrs. Anderson get out of the coverage gap because both the amount that Mrs. Anderson pays ($27.90) plus the manufacturer discount payment ($30.00) count as out-of-pocket spending. The remaining $4.10, which is 5% of the drug cost and 55% of the dispensing fee paid by the drug plan, isn’t counted toward Mrs. Anderson’s out-of-pocket spending.

In 2015, Medicare will pay 35% of the price for generic drugs during the coverage gap. You’ll pay the remaining 65% of the price. What you pay for generic drugs during the coverage gap will decrease each year until it reaches 25% in 2020. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.

Example: Mr. Evans reaches the coverage gap in his Medicare drug plan. He goes to his pharmacy to fill a prescription for a covered generic drug. The price for the drug is $20, and there’s a $2 dispensing fee that gets added to the cost. Mr. Evans will pay 65% of the plan’s cost for the drug and dispensing fee ($22 x .65 = $14.30). The $14.30 amount he pays will be counted as out-of-pocket spending to help him get out of the coverage gap.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the price of the drug. The discount for brand-name drugs will apply to the remaining amount that you owe.
Items that count towards the coverage gap: Your yearly deductible, coinsurance, and copayments, the discount you get on brand-name drugs in the coverage gap and what you pay in the coverage gap
Items that don’t count towards the coverage gap: The drug plan premium, pharmacy dispensing fee and what you pay for drugs that aren’t covered.

 

Medicare Drug Plans- Rx Help is Here! – Medicare Redlands CA, Yucaipa CA

Medicare Drug Plans- Rx Help is Here!

 

Medicare Part D Prescription Drug Plans

Medicare Parts A and B do not include prescription drug coverage. On January 1, 2006, Medicare launched an outpatient prescription drug benefit to all Medicare beneficiaries. The new benefit, called Part D of the Medicare Program, is designed to lower the cost of prescription drugs for most senior and disabled Medicare beneficiaries.

People on Medicare, Part A or B, who would like to receive prescription drug (rx) coverage under Part D have to enroll in a private insurance policy that offers Part D coverage and is approved by Medicare. These plans are called Medicare Prescription Drug Plans (PDPs).

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Signing up for a Medicare Prescription Drug Plans (PDP)

Medicare Prescription Drug Plans (PDPs) will offer prescription drug benefits. Drug plans will vary in what prescription drugs are covered, how much you have to pay, and which pharmacies you can use. Like any other insurance, if you join you will pay a monthly premium and pay a share of the cost of your prescriptions. PDP Prescription Drug Coverage

Available in Two Ways- Integrated and Stand-Alone

Medicare Part D is available in one of two ways- either as an integrated part of a health plan, or as separate, stand-alone drug coverage. In many cases, we find that enrolling in a health plan that includes Part D drug coverage provides a better value than purchasing a drug-only plan. However, for some people (those who want to retain medical coverage through a Medicare Supplement plan, for example) a stand-alone PDP is an appropriate choice. Advantages of Prescription Drug Plans Costs of PDP Plans

Selecting the Right PDP Plan

The Medicare Part D drug benefit will present a wide and confusing array of new options to more than 40 million Medicare beneficiaries. Explore this section on Prescription Drug Plans and learn How The Litchfield Agency Helps Seniors