What is the doughnut hole?

When you sign up for Medicare, there are a few options for coverage and health care plans. Original Medicare covers hospital visits and doctor services, but some may find they are in need of supplemental insurance to help pay for outpatient prescription medications. In some instances, prescription medications are covered under Original Medicare, but these are during inpatient care.

Medicare beneficiaries have two options for prescription drug coverage: Part D or Medicare Advantage Plans. Both plans require higher premiums than Original Medicare and come with their own co-payments and deductibles for prescribed medications. There are advantages to both forms of coverage and most seniors choose to enroll for drug coverage. Supplemental insurance may help cover the high costs of some medicines, but Part D prescription drug plans also have a coverage gap that may leave some patients paying out of pocket.

Part D prescription drug plans
Medicare Part D involves prescription drug plans that have their own out-of-pocket monthly premiums. These plans are chosen based on personal needs, as each plan covers different prescription medications. These medications are based on a tier structure that affects how much they cost. In general, prescriptions that are based on the lower tiers are less expensive than higher-tiered prescription drugs. Under some circumstances, you may be required to try a lower-tiered or generic prescription medicine before getting coverage for a more expensive medication on a higher tier.

Seniors are eligible for a prescription drug plan if they are already enrolled in Original Medicare (Part A and B). You can enroll in a Part D prescription drug plan during the open enrollment period that runs annually from Oct. 15 through Dec. 7.

What is the cost?
Prescription drug plans vary in cost depending on which medications are included in the plan. Part D plans also come with a deductible that must be reached before Medicare will begin paying for prescription medications. In other words, you will have to pay out of pocket for your medicines up to your deductible amount before coverage begins. When picking up your prescription medications, you will also need to make a co-payment that varies by tier once Medicare coverage has kicked in.

Coverage gap
With Part D prescription drug plans, Medicare will cover a portion of the cost of medications up to a certain amount. Once the limit, commonly referred to as the doughnut hole, is reached, seniors used to be left on their own to cover their expenses. As a result of the Affordable Care Act, however, Medicare will still offer some assistance with the total cost for certain medications after reaching the doughnut hole.

In 2014, the coverage limit is $2,850, slightly lower than the $2,970 coverage limit last year. Once you reach this limit, the Medicare benefits change. Eventually, the coverage gap will fade out of Medicare with no outstanding limit, and seniors will receive coverage for the prescriptions.  For 2014, those who reach the coverage gap will be responsible to cover 47.5 percent of the cost of brand-name drugs and 72 percent for generic drugs. Medicare will cover the remaining balance, though the total cost will count toward out-of-pocket expenses, which will help seniors get out of the coverage gap sooner. As the coverage gap shrinks, the cost for generic drugs will decline to 25 percent by 2020. Deductibles, coinsurance and co-payments all are counted toward the coverage gap limit.

To maximize your Senior Health Insurance benefits, visit MySeniorHealthPlan.com for quick, simple and easy information.

Pete Blasi