It’s no secret, the Medicare prescription drug plan “coverage gap” (fondly referred to as the donut-hole by many) is very complicated.
Many people will never need to understand it because they won’t ever enter the coverage gap, but for those that do the good news is that the complexity of the “donut hole” will slowly fade away.
Over the next several years, you’ll pay less in the coverage gap until it’s closed by 2020. By 2020, you’ll pay only 25% for covered brand-name and generic drugs while in the coverage gap—the same percentage you pay from the time you meet the deductible (if your plan has one) until you reach the out-of-pocket spending limit (up to $4850 in 2016).
In 2017 you’ll pay 40% for covered brand name (it was 45% in 2016) and 51% for covered generic drugs. (it was 58% in 2016). The reduction continues down in 2018 with you paying 35% for brand name/44% of generic; 2019 you’ll pay 30% of the brand name/ 37% of the generic.
So, what counts towards the coverage gap? Your yearly deductible (if your plan has one), your prescription drug co-pays and/or co-insurance, the discount you get on brand name drugs in the coverage gap and what you pay for drugs in the coverage gap.
What doesn’t count towards the coverage gap? Your drug plan premium, any pharmacy dispensing fees and what you pay for drugs that aren’t covered by your plan. (for example; compounded prescriptions and the ever popular Viagra).
Remember, drug plans change their formulary (the list of drugs they cover and what price you’ll pay for them) every year. They will notify you the end of September if any of their changes affect you. Early October is the time to contact me for a no-cost review and plan analysis.