Saturday, October 2, 2010

Changes In Medicare Part D "Doughnut Hole", Explained

I thought I'd put together a little more background, for this earlier post -- to explain what the Medicare Part D "Doughnut Hole" is all about. Before I could, though, the fine folk at the NYT got a nice explainer out.

So, per the able keyboard of Walecia Konrad, for The New York Times, overnight:

. . . .With Medicare Part D drug coverage, seniors pay a $310 deductible, then 25 percent of their drug costs until they reach $2,830 in total prescription drug expenses for the year. After that, beneficiaries must pay for drugs out-of-pocket until expenses exceed $6,440.

At that point, they pay 5 percent of their drug costs for the rest of the year. For 2011, those numbers are expected to stay about the same.

The big change, however, occurs when Medicare beneficiaries actually hit the doughnut hole. That’s when they will receive a 50 percent discount on brand-name drugs and a 7 percent discount on generics.

By year 2020 the hole will be closed. In the meantime, Mr. Gada said, Medicare recipients need to be realistic.

"There’s lots of talk out there about the doughnut hole closing, but it’s not going to happen this year,” he said. “Even with the 50 percent discount, if you’re in this situation, you still may have some major costs. . . ."

Indeed -- it is unclear whether the 50% discount will be adequate to prevent lower income seniors from simply going off medications, once they reach the threshold -- the doughnut's hole. We'll see.

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