Medicare Part D & the Donut Hole
Medicare Part D may seem simple at the surface, but it can create surprises for some Medicare beneficiaries. There are features within this coverage that’s unique to Medicare and can lead to higher out of pocket cost with your medications. We will break down the Coverage Gap and what you are needing to know about Medicare Part D.
What do you need to know?
Deductibles
It is not uncommon for Medicare Part D coverage to have deductibles that need to be satisfied before your plan will help start sharing the costs of your medications. These deductibles can be as low as $0 and can be as high as $505 (2023). Of course, what you pay for each medication depends on the medicine itself as well as the plan that you have selected.
Copays
Copay amounts for your medications will vary based on the plan that you have selected and the medication that you are being prescribed. Each Medicare Part D plan will have 5 tiers or levels that they organize the medications that they cover. It is not uncommon that your medication is a tier 2 with one insurance company and a tier 3 with another. This is important to know since it impacts the out-of-pocket cost that you will have at the pharmacy when you are filling your prescriptions.
Now all these terms may seem like nothing different than what you have experienced with other insurance coverage before Medicare. However, Medicare Part D does not have a max out of pocket. Meaning that you will ALWAYS have out of pocket costs with your medications while you are on Medicare. In addition to not having a cap on expenses with your medications, Medicare Part D also have a feature in the coverage call the “Coverage Gap” or the “Donut Hole”.
Coverage Gap "Donut Hole"
Typically, this impacts individuals on Medicare who are taking high-cost medications. Once the total cost of your medications exceeds $4660 for you and the insurance company combined, you have now entered the Coverage Gap stage. In this stage you can anticipate paying 25% of the actual cost of your medication. For example, you typically have a $25 copay for your medication and the actual cost is $600. During the coverage gap, the cost of the same medication would be $150.
Catastrophic Coverage
Catastrophic coverage is the final stage of cost sharing when it comes with Medicare Part D. This stage begins when you and your plan have spent $7400 (2023) in costs with your medications. This includes all deductibles, copays, and costs in the Coverage Gap. At this time, you could expect to pay 5% of the cost of your medications. From the example prior, your medication monthly cost would now be $30.
Catastrophic coverage stage does go until the end of the calendar year with your coverage. It is important to note that not all individuals who hit the coverage gap enter this stage of coverage. To learn more about the coverage gap and Medicare, go to medicare.gov.
You don't have to do this on your own
It can easily get overwhelming and make your head spin when trying to project your yearly costs with medications. Do not feel like you must navigate this on your own! Schatz Benefit Group is a team of experts that have helped thousands of individuals with their Medicare needs. With education at the center of everything that they do, give them a call for a free consultation to get the answers that you have been searching for.