What is the Medicare donut hole?The "donut hole" is a coverage gap in certain Medicare prescription drug plans. This gap is a temporary limit on what the plan will cover.
As part of the Affordable Care Act, the health insurance program Medicare gives qualified recipients (people 65 or older, people under 65 with certain disabilities, and a few others) the option of paying a monthly premium for outpatient prescription drug coverage. This section is called Medicare Part D.
With Medicare Part D, you pay a monthly premium, plus the full price of your medication until you reach the $310 deductible amount. After meeting this deductible, you pay 25 percent of your prescription drug costs, until the total spending between you and your plan reaches a certain limit ($2,960 in 2015, or $3,310 in 2016).
After you hit this limit, the coverage gap, or “donut hole,” begins. You are now responsible for 45 percent of the cost of covered brand-name prescription drugs until you reach the yearly out-of-pocket spending limit (which differs from year to year), after which coverage kicks back in.
Reducing the wallet impact of the donut holeIf you're looking to save during the coverage gap, switching over to generics could be a good option. Medicare pays 35 percent of the price for generic drugs during the coverage gap, as opposed to 45 percent for brand-name. More good news: the percentage you pay for generics during the coverage gap will decrease each year until it reaches 25 percent in 2020.
However, even with these discounts on generics, the Medicare “donut hole” can make it hard for senior citizens without any supplemental plan to pay for their prescriptions. This is a good reason to look into the FamilyWize Prescription Savings Card. It’s free to obtain and use, and gives you discounts on prescriptions, whether you're insured or uninsured. There’s no registration required, and using the card when buying prescription drugs can save you up to 75 percent.
Just show the FamilyWize card to your pharmacist the next time you pick up a prescription, and ask them to compare the discount offered by the card to the discount offered by your insurance. In many cases, the FamilyWize price is often the better deal. You can also check the price and compare before picking up by using our Drug Price Lookup tool, available on our website or through the smartphone app (just search "FamilyWize" on your smartphone's app store).
You can also check to see if you qualify for Medicare’s Extra Help options for paying Part D, which prevents you from entering the coverage gap. Also, check out the Medicare website’s Part D section for further information on the donut hole gap, with scenarios to help explain it.