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Medicare Part D

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Closing the Medicare Part D prescription drug coverage gap

Health reform gradually reduces the gap in Medicare Part D prescription drug coverage – known as the “donut hole” – by reducing beneficiaries’ share of drug costs over a period of ten years. In 2010, Minnesotans in the coverage gap received a $250 check from Medicare.  In 2011, beneficiaries in the coverage gap will receive a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs at the time they buy them and will not have to spend as much out-of-pocket.  The coverage gap will be closed completely by 2020.

How does the prescription drug coverage gap work in 2011?

Generally, after paying a deductible of $310, beneficiaries with Medicare Part D coverage are responsible for paying 25 percent of the cost of their prescription drugs. However, once beneficiaries run up an additional $2,530 in costs ($632.50 of which is paid out-of-pocket and $1,897.50 is picked up by the Medicare drug plan), beneficiaries enter the prescription drug coverage gap. The Affordable Care Act changed the law so that beneficiaries are no longer fully responsible for paying 100 percent of their drug costs in the coverage gap. Instead, in 2011, beneficiaries receive a 50 percent discount on brand name drugs and a 7 percent discount on generic drugs until they have spent an additional $3,607.50. At that point, beneficiaries move out of the prescription drug coverage gap and Part D catastrophic coverage kicks in, and Medicare covers about 95 percent of the cost of prescription drugs for the remainder of the year.


How much will Part D beneficiaries save this year?

In 2011, Minnesotans who have received discounted prescription drugs in the prescription drug coverage gap saved an average of $594.

Won’t drug makers raise prices to make up their losses?

Possibly. Drug makers could partially offset that lost income by raising the prices they charge Medicare drug plans.

How does the prescription drug coverage gap work in 2011?

Generally, after paying a deductible of $310, beneficiaries with Medicare Part D coverage are responsible for paying 25 percent of the cost of their prescription drugs. However, once beneficiaries run up an additional $2,530 in costs ($632.50 of which is paid out-of-pocket and $1,897.50 is picked up by the Medicare drug plan), beneficiaries enter the prescription drug coverage gap. The Affordable Care Act changed the law so that beneficiaries are no longer fully responsible for paying 100 percent of their drug costs in the coverage gap. Instead, in 2011, beneficiaries receive a 50 percent discount on brand name drugs and a 7 percent discount on generic drugs until they have spent an additional $3,607.50. At that point, beneficiaries move out of the prescription drug coverage gap and Part D catastrophic coverage kicks in, and Medicare covers about 95 percent of the cost of prescription drugs for the remainder of the year.

How much will Part D beneficiaries save this year?

In 2011, Minnesotans who have received discounted prescription drugs in the prescription drug coverage gap saved an average of $594.

Won’t drug makers raise prices to make up their losses?

Possibly. Drug makers could partially offset that lost income by raising the prices they charge Medicare drug plans.

What if I don’t get a discount and I think I should?

If you think that you have reached the coverage gap and you don’t get a discount when you pay for your brand-name prescription, you should review your next Explanation of Benefits (EOB) notice. If the discount doesn’t appear on the EOB, you should work with your drug plan to make sure that your prescription records are correct and up-to-date. If your drug plan doesn’t agree that you are owed a discount, you can appeal. You can get help filing an appeal from your State Health Insurance Assistance Program (SHIP) or by calling 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Call 1-800-MEDICARE or look at the back cover of your Medicare & You handbook to get the telephone number for your local SHIP.

How is the prescription drug coverage gap/donut hole closed by 2020?

The schedule below outlines how much Medicare Part D beneficiaries will pay for drugs while in the prescription drug coverage gap from 2012 to 2020.

• 2012: 50% for brand name drugs and 86% for generics
• 2013: 47.5% for brand name drugs and 79% for generics
• 2014: 47.5% for brand name drugs and 72% for generics
• 2015: 45% for brand name drugs and 65% for generics
• 2016: 45% for brand name drugs and 58% for generics
• 2017: 40% for brand name drugs and 51% for generics
• 2018: 35% for brand name drugs and 44% for generics
• 2019: 30% for brand name drugs and 37% for generics
• 2020: 24% for brand name drugs and 25% for generics