According to the Henry J Kaiser Family Foundation (KFF), 43 million Medicare beneficiaries are enrolled in a Part D plan. This accounts for 72% of Medicare beneficiaries nationwide!
Medicare Part D started in 2006, and back then, you were required to pay 100% of the costs for brand name drugs. That percentage has lowered over the years, and better yet, 2020 brings super exciting news regarding the Medicare Part D donut hole.
How Does the Medicare Part D Donut Hole Work in 2019?
The Medicare donut hole is a gap in your Part D plan that starts after you’ve spent your deductible ($415 or less) and exceeded the initial coverage limit ($3,820) in total out-of-pocket costs.
You are in the gap until you reach the annual out-of-pocket threshold ($5,100). During this time, you are required to pay more for your prescriptions. This encourages you to choose generic options whenever possible.
Once you pass the donut hole and reach the catastrophic coverage period, you only have to pay 5% of all drug costs for the remainder of the year.
How Much Is the Donut Hole in 2019?
In 2019, you will pay 25% of brand-name drugs in the donut hole. This is the same as what you would pay before you enter the donut hole, meaning the Medicare donut hole is completely closed for brand-name drugs.
However, you will be responsible for up to 37% of generic drug costs in 2019. The plan is for this to decrease to a max of 25% in 2020, effectively closing the donut hole. Other Medicare donut hole 2019 costs include:
- Initial Deductible: increasing by $10 ($405 to $415)
- Initial Coverage Limit: increasing by $70 ($3,750 to $3,820)
- Out-of-Pocket Threshold: increasing by $100 ($5,000 to $5,100)
How Will I Know If I’m in the Donut Hole?
In 2019, you’ll know if you’re in the donut hole based on your “EOB” notice. The EOB is an “Explanation of Benefits.” If you have a Part D plan, you should be receiving this every month.
The notice will tell you how much you’ve spent for the year on covered drugs and whether or not you’ve reached the coverage gap. Some people may never reach it – it depends on how much you’re spending on your prescriptions.
What Drugs are Covered in the Hole?
Your “formulary” does not change when you’re in the donut hole. The drugs that are listed on your formulary are the drugs that you can receive coverage for.
When Is the Donut Hole Going Away in 2020?
The Medicare Part D donut hole is scheduled to close completely in January 2020. Thanks to the Bipartisan Budget Act of 2018, the gap has closed a whole year ahead of schedule. However, the gap is only closing for brand-name drugs.
The gap for generic drugs will decrease, but will not be completely eliminated until 2020. This is great news for beneficiaries like you because generic drugs already have a lower price point – it’s the brand-name drugs that typically cause hardship in the donut hole.
What Will My Part D Costs Be in 2020?
The standard Part D deductible is $435 in 2020. After you meet the deductible, you’ll pay 25% of both brand name and generic drug prices.
Once you pay $4,020 out-of-pocket, you’ll still only pay 25% of your prescription drug costs, instead of entering the donut hole.
After you pay $6,350, you enter Catastrophic Coverage, and you’ll pay 5% of your prescription costs.
What Are Your Medicare Part D Donut Hole Coverage Options?
Original Medicare (Part A and B) does not cover prescription drugs. If you are looking for prescription drug coverage, you have two options. You can enroll in either a Medicare Advantage or Part D plan.
If you are exclusively looking for prescription drug coverage, Part D may be right for you. If you are looking for prescription coverage along with other benefits like hearing, dental, or vision coverage, a Medicare Advantage plan is probably best for you.
Trying to decide between Medicare Advantage or a Part D plan can be difficult. Our licensed agents can help you enroll in the plan that best fits your unique needs and budget.
They can answer any questions or concerns you may have. Plus, our agents are contracted with most major carriers in your state, so there is no bias when we help you select a plan. If you’re interested in arranging a no-cost, no-obligation appointment, call us at 844-431-1832 or contact us here.
This post was originally published on January 10, 2019, and updated on October 16, 2019.