Receiving Discounts During Medicare’s “Doughnut Hole”

Wednesday, April 1, 2015

In the past, those enrolled in the Medicare Part D prescription drug plan could expect to enter in Medicare’s “Doughnut Hole,” the temporary coverage gap where they would have to pay out-of-pocket expenses for their usually-covered prescription drugs.  This coverage gap begins when the member’s total drug costs – including what the member and their plan have paid for drugs – reaches $2,960 in 2015.

In the years before 2011, entering in the coverage gap would mean that members would pay 100 percent of the cost of their drugs. But now, as a result of the Affordable Care Act, or “Obamacare,” the gap is shrinking with discounts to help members pay for their drugs during the coverage gap. In 2015, there is a 55 percent discount on brand-name drugs and a 35 percent discount on generic drugs while a member is in the coverage gap. These discounts will continue to increase each year until 2020. By that time, members will typically pay no more than 25 percent of the cost of the drug.

Who qualifies for the discounts?

Anyone under the Part D drug coverage and falls in the doughnut hole can receive the discounts, including those enrolled in:

  • A “stand-alone” Part D drug plan
  • A Medicare Advantage health plan that provides drug coverage.
  • A Part D drug plan or a Medicare Advantage plan sponsored by a current or former employer or union.

These discounts will be automatically applied at the pharmacy or by your plan’s mail-order service.

In 2015, you reach catastrophic coverage once you have paid $4,700 out-of-pocket. During catastrophic coverage, your costs will be significantly less.