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Part D Coverage Gap Closing Quickly

Posted by www.psmbrokerage.com Admin on Tue, Jun 05, 2018 @ 02:46 PM

Medicare Part D Coverage Gap Closing Quickly

The gap for brand-name prescription drugs for Medicare beneficiaries is likely to slip down to 25% of drug costs from the scheduled 30% next year, thanks to the Bipartisan Budget Act of 2018. Part D Coverage Gap Closing QuicklyAgents may want to explain to their clients to compare Part D options during the Annual enrollment Period late this year, enabling them to take advantage of the gap and save on prescription costs.

The coverage gap had been gradually shrinking for several years since the Affordable Care Act set a path to close it by 2020. “The gap was never scheduled to close 100%,” says Dr. Katy Votava, president of GoodCare.com. Once it closes, “beneficiaries will still pay 25% out of their pockets.”

Although the brand-name coverage gap closes in 2019 instead of 2020, the coverage gap doesn’t end a year early for generic drugs. That stays on the closure schedule as prescribed by the ACA—cost-sharing will fall to 25% for generics in 2020, after dropping to 37% for 2019. Even though generic cost-sharing isn’t falling as fast, “37% of the price of generic drugs is likely to be less than 25% of brand-name drugs,” says Juliette Cubanski, associate director of the program on Medicare policy at the Kaiser Family Foundation.

The government sped up the closure of the gap for brand names by shifting costs to manufacturers. The budget law increases the discount that brand-name drug manufacturers provide from 50% to 70% in 2019; Part D plans will pick up the remaining 5% of costs in the coverage gap. “There’s no similar provision for generics—so plans would have to pick up costs” if the gap closed faster for generics, says Cubanski.

How the Coverage Gap (doughnut hole) Works

The law doesn’t change the doughnut hole’s beginning and end points, notes Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center. Under the standard rules, a beneficiary pays 25% of drug costs after the Part D deductible, while the plan picks up 75% of the costs, until the total amount the beneficiary and the plan pay hits the initial coverage limit of $3,750 in total drug costs this year.

Then the beneficiary enters the doughnut hole. In 2018, the beneficiary pays 35% for brand-name drugs, while the plan pays 15% and the manufacturer offers a 50% discount. For generic drugs in 2018, the beneficiary pays 44% of drug costs and the plan pays 56%.

The beneficiary exits the doughnut hole after he exceeds $5,000 in out-of-pocket spending for covered drugs. Once out of the gap, catastrophic coverage kicks in and the beneficiary pays 5% of drug costs, while the plan pays 15% and Medicare pays 80%.

The budget law change effective in 2019 means beneficiaries will pay 25% for brand-name drugs until reaching catastrophic coverage. And come 2020, cost-sharing for all drugs—brand name and generic—will be 25% for beneficiaries before catastrophic coverage.

While all Part D plans have to match these rules in actuarial terms, what consumers actually pay varies among Part D plans. Many plans have tiers, for instance, where preferred drugs have low cost-sharing and nonpreferred have higher cost-sharing, and some plans offer additional coverage in the doughnut hole.

SEE ALSO: Retirees, Avoid These 11 Costly Medicare Mistakes

Because the drugs you take and the different plan structures can affect your actual costs, it’s important to shop Part D plans every year at open enrollment, which runs October 15 through December 7, to see if you can score a better deal. At the least, landing in the coverage gap for brand-name drugs next year will cost a little less.

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Tags: Doughnut Hole, Part D, medicare updates

Closing the gap on the 'Doughnut Hole'

Posted by Guadalupe Cantu on Fri, Oct 11, 2013 @ 11:43 AM

Medicare Supplements The Affordable Care Act rollout last week was not all smooth sailing. It faced multitudes of glitches and hiccups online; as well as, offline. Despite its rocky start, the Affordable Care Act aims to reduce the Medicare coverage gap, also known as the "doughnut hole," by 2014 and completely close it by 2020, according to Medicare.gov.

Before the Affordable Care Act, benefactors would have to pay their insurance yearly deductible in out-of-pocket cost until their medical expense limit reached the copay of $4500.00, before any coverage premiums would kick in.

In 2014, with the Affordable Care Act, beneficiaries begin with the monthly Part D premiums and pays 100% of the drug cost until satisfying the $310 deductible. Then the plan pays for the rest of the cost of the medicine until hitting the expenses cap of $2850.00; a 25% out-of-pocket drop in copay. That’s when seniors are faced with the doughnut hole, once more.

The dreaded “doughnut hole” – is the difference seniors out-of-pocket drug expenses begins, after their Part D premiums coverage cap has been exceeded, and before they are eligible for the amount the government pays for "catastrophic" drug coverage.

Since 2010, the Medicare gap has been slowly closing through steady drug discounts. This is largely due to the government reaching out to pharmaceutical industry and bargaining for drug discounts. Discounts for brand name drugs and generic will continue. By next year, were expected to pay 47.5% for premium brand pharmaceuticals names and 72% for generic ones.

By 2020, Medicare Part D enrollees will save 75% on both premium and generic medication, according to the Centers for Medicare & Medicaid Service.

Resource: Boomerbenefits.com

Please give us your feedback!
Is the ACA program better than what we had before? Do you think it will truly make Insurance more competitive and affordable?

Source: LifeHealthPro & Centers for Medicare & Medicaid Service

Additional Updates:
    • 2014 Medicare Advantage and Part D Certifications are now available! Learn More

Tags: Obamacare, Doughnut Hole, Part D Premiums, Medicare, Affordable Care Act, Affordable Care

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