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.