Many seniors find themselves stuck in a coverage gap each year. This can be a pain in the wallet if you don’t prepare for it!
What is a Coverage Gap or Donut Hole?
The Medicare Coverage gap is a stage in your Medicare coverage where you pay more for prescription coverage. Each year the CMS (Centers for Medicaid & Medicare services) sets a limit on the percentage they will pay. For 2019, the limit was $3820. This means once your total actual retail cost of prescriptions drugs reached $3820 you hit the gap or doughnut hole and your co-pay changed the initial small percentage co-pay to 25% of the actual retail cost.
For example, in 2019 if you are taking a name brand drug which actually costs $1000 a month, your co-pay might be $90 a month until your total cost reaches $3820. For this drug it would take only 4 months to reach the gap. At this point your out of pocket costs rise from $90 a month to 25% of the total actual cost or $250 a month until you reach the next limit as set by the CMS. After the last limit of $5,100 is reached the out of pocket cost is reduced from 25% to a near or below the pre-gap co-pay. How long someone is in the gap depends on the total retail costs of your drugs per month. Some won’t ever reach the gap but many do.
In 2020 the coverage gap has increased where members pay even more. Patients will reach the Donut Hole when the actual cost reaches $4020, and will remain there until they reach $6,350.
For more on Donut hole and the 4 stages see below illustration.
3 Things to look into to minimize drug cost during the coverage gap/donut hole in 2020
1. Find Extra Help - according to Social security administration, there are a few qualifications you have to meet.
a. Resource limit single citizens can to $14,390 per year and married couples can earn up to $28,720. Resources such as real estate, bank accounts, mutual funds count toward this limit. Resources such as your primary residence, vehicles, property you need to self support or grow produce, life insurance, and Jewelry)
b. Income limit for singles is $18,735 and married couples is $25,365.
You can call 1-800-Medicare (1-800-633-4227) if you need assistance applying. Keep in mind that social security doesn’t require proof, but they do match your record to other government agencies.
2) Changing Drugs - Asking your doctor if there are any other drugs that you can take to keep your cost low each year.
3) Explore Stand Alone Prescription drug options- Plans like silver script plus can help you with costs during the coverage gap.
Bonus: Make sure to have a chat with your agent personally to go over all of these options with you, and confirm your prescription coverage and costs as you see prescription cost can increase year to year.
For more on insurance contact Maria Townsend at 336-423-8722 or email MTownsendInsurance@gmail.com
An interview is available from Maria Townsend for expertise on this matter