Donut Hole is the term used to describe the out of cover prescribed drug expenses in Medicare Part D. Part D is the US Government insurance initiative that covers prescribed drug costs of its policy holders. But, when the claimed prescribed drugs cost is beyond the plan’s credit limit or out of the prescribed drug formulary, the excess cost has to be fully borne by the policy holder. This gap [out of pocket expenses], which the plan does not cover is referred to as Medicare Part D Donut Hole or Medicare Part D Coverage Gap.
In formal insurance terms, Donut Hole is defined as the difference observed between the plan’s initial coverage limit and the catastrophic coverage entry. The Medicare beneficiary is responsible for paying the difference from the initial coverage limit described in the Part D program until the point of eligibility for the catastrophic coverage. When the beneficiary enters the catastrophic coverage Medicare will take over and pay the bills until the end of that particular year.
Medicare has worked out certain ways to patch up the Donut Hole, but not all beneficiaries are aware of this. Until their usage reaches the Part D program limits and their coverage stops, they do not look for the remedy. If you are enrolling into new schemes in Part D, ask the representative what is the Donut Hole in your Part D coverage and also check what are the latest rebates and considerations offered.
The basic three reimbursements offered since 2010 have been listed below.
- A minimum of $250 compensation for all those who hit the Part D coverage gap
- 50% offer on certain drugs in the Donut Hole
- Up to $700 rebate on generic and few branded drugs in the coverage gap
Medicare is intending to work out complete refund of drugs cost so that the coverage gap is terminated by the year 2020.
How to Avoid the Donut Hole?
- Buy drugs that are not very expensive so they will not reach the credit limits soon and make the coverage stop
- Choose Part D drug plans that help you save money when you are on long term medications
- Use Medicare Part D plan card every time you buy your drugs through which you can avail discounts
- Whenever plan cards are used to buy medicines the cost is automatically accounted towards deductibles and will not seize the plan’s drug cost coverage