What is the doughnut hole I have been reading about?

[helen c.]

my husband has MDS raeb-1 intermediate he takes the vidaza injections 5 days followed by 5 days of neupogen procrit shots as needed he is transfusion independent right now had platlet infusion mon. the 9th of march and on 3 antibiotics daily hope i didnt leave anything out we have medicare and blue-cross blue shield thru the schoolboard so far we havnt had to pay very much out of pocket. what is the doughnut hole i have been reading about. this scares me we could not afford these meds. if it werent for ins.

[Neil Cuadra]

There is a good explanation of the Medicare coverage gap in Medicare and You 2009 (PDF, 5.9MB) from the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS). I will try to summarize.

Medicare Part D covers prescription drugs. What's covered depends on the specific Medicare Prescription Drug Plan you choose. As a patient on Medicare, you pay a monthly premium, plus a share of the cost of each drug prescription. The amount you pay varies during the year, and that's what can make it confusing. The "donut hole" refers to a coverage gap that is in most Medicare drug plans.

Here's the way it generally works. Note that I'm speaking in general, not about a particular person or plan, and the dollar amounts are only examples since they differ from plan to plan.

1. If your plan includes an annual deductible, then at the start of the year you pay for your own prescription drug costs until the deductible amount is reached. Example: If your deductible is $295, then you pay the first $295 of the year's drug costs. There are no surprises. You know you have to pay a few hundred dollars at the start of each year.

2. Once your deductible has been paid, Medicare helps pay for drugs. You pay only coinsurance or copayment amounts, until the total drug costs for the year have reached a certain total. Example: You pay only a small share of drug costs until the full cost of those drugs reaches $2700. So far in the year you've paid only hundreds of dollars, with Medicare paying for the rest of the first $2700.

3. After that limit, you are responsible for all prescription drug costs until you reach your annual out-of-pocket total. You are now in the "coverage gap" or "donut hole", and it can be expensive. You pay in full for prescription drugs until your total payments for the year (i.e., your deductible amount plus your coinsurance and copayment amounts) reach some fixed maximum. Example: You pay for all drugs until the total you've spent for the year is $4350.

4. Beyond your out-of-pocket total, Medicare provides you with so-called catastrophic coverage. You pay at most small coinsurance or copayment amounts, as in #2 above. Your share of a prescription might be $10 or less, so you aren't likely to spend much more for the year.

The CMS offers some tips on Bridging the coverage gap (PDF, 176K)

[Neil Cuadra]

See the new Medicare Part D page and Medicare Part D Calculator for information about the "donut hole" and how the Health Care and Education Reconciliation Act of 2010 will gradually close this coverage gap.