Medicare Part D: 2011 Coverage Gap (Donut Hole)


Recently on one of our blog posts we had a comment regarding the 2011 contributions while in the Coverage Gap (Donut Hole) and how the total out-of-pocket expenses would be allocated until a beneficiary reached catastrophic coverage.

Medicare has changed some of its wording and makes reading a little more confusing as to what will actually be applied to your out-of-pocket expenses while in the donut hole.

The Agreement

As we have been told the pharmaceutical companies have agreed to invest $18 billion towards Part D prescription drug costs for beneficiaries who fall into the Coverage Gap.  It has been agreed that they will contribute 50% of the agreed upon price and the beneficiary will pay 50% all starting in 2011.

The Concern

But a recent comment about how much would actually be applied to a beneficiary’s out-of-pocket expense had some good points.  The way things are written sounds like only the 50% copayment by the beneficiary would be applied to the out-of-pocket expense, and reaching catastrophic coverage could take much longer giving little value to the 50% discount.

The Good News

I have written before about Q1Medicare and what a great resource for Medicare Part D information.  So I asked Q1Medicare the question and they came back and told me that both contributions (1) 50% from the Pharmaceutical Company and (2) 50% from you, the beneficiary, would be applied towards the total out-of-pocket costs through the coverage gap.

What this means is if you have a prescription drug that costs $400 per month at the agreed upon price, 50% or $200 will be paid by the pharmaceutical company and 50% or $200 by the beneficiary, but $400 will count towards your total out-of-pocket expense.

Who is Eligible?

You are eligible if you have a Part D stand alone plan or a Part D plan through Medicare Advantage and you are NOT receiving any type of Low Income Subsidy (LIS). Sometimes you are referred to as a non-LIS Beneficiary.

A word of caution: In order for the “brand” name drug to be included, the pharmaceutical manufacturer must sign an agreement with Medicare.  If there is no agreement for a particular drug, then it is NOT entitled to the 50% discount.

I am sure Medicare will start posting those drugs that will be part of the Coverage Gap as the agreements are received.

Beginning October 1, 2010 Medicare Part D Prescription Drug plan Marketing Activities can begin.  This is the time you want to start getting your information together to compare other plans.


4 Responses

  1. That's a great question--about the out-of-pocket expenses. Thank you for finding the answer. This entire post is very informative and helpful.
  2. Thank you so much for helping people who are on part D medical. This should make it easier to lower the payments. So many people need to read this article. 5* rec. CONGRATULION to you!
  3. [...] the full post: “Medicare Part D: 2011 Coverage Gap (Donut Hole).” from → Medicare, Medicaid ← Tips on Caring for an Aging Parent Long-Distance [...]
  4. This donut hole has confused me before. I remember when my dad hit it last year and all the sudden his prescription drug costs skyrocketed. We ended up going back to the doctor and removing him from half his medication since it didn't seem that necessary at the time.
  5. What is the limit for 2011 before you enter into the donut hole gap/

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