Diabetes and Medicare: Donut Hole Elimination

In an effort to close the legendary ‘donut hole” gap in Medicare Part D coverage the government is sending out $250 checks to hundreds of thousands of Medicare recipients who require prescription medications. The intent is to close the gap in coverage by 2012.

In explaining the donut hole it is important to know there are strong benefits for Medicare users up to $2,830. There is also strong coverage once total prescription amount exceeds $6,440. It is the middle area for which the term “Donut Hole” applies.

There are nearly 28 million Americans enrolled in Medicare Part D coverage and have survived in gap coverage by either paying a substantial amount of out of pocket expenses related to prescription drugs or by simply refusing to refill prescriptions when the benefits ran out. The later can place the individual at risk and cause additional stress and health issues to develop.

Over a fourth of all Medicare Part D users reach the $2,830 prescription level and are left to consider how to fund the more than $3,500 it takes before any additional help is provided. That being said there are plans to effectively eliminate the donut hole.

AmericanProgress.org reports, “Beginning in 2011, Part D beneficiaries who reach the doughnut hole will get a 50 percent discount. This will be phased up to a 75 percent discount on brand name drugs by 2020 and a 7 percent discount on generic drugs—bringing costs to Part D beneficiaries back down to 25 percent (standard coverage level), thereby effectively closing the doughnut hole.”

In the meantime the government continues to send out checks worth $250 to Medicare Part D participants who reach the lower threshold of the ‘donut hole’ with a situational review every quarter. This means that if you reach the threshold in the 3rd quarter you would still be eligible to receive one $250 rebate once that threshold is exceeded.

Perhaps what is most troubling to those observing the program is the disconnect that occurs when Medicare patients reach the threshold and then determine they simply can’t afford to continue the treatment their primary health care provider recommends. By standardizing the subsidy the stress of that donut hole gap is reduced. The perceived end suggests a greater continuance of coverage and an overall improved health outlook for those using this Medicare plan.

For diabetics it is important to note that one in ten Medicare Part D participants will stop taking their diabetes medications once they reach the donut hole threshold. Interestingly 85% of all Medicare Part D participants exceeded the lower threshold, but did not reach the $6,440 level where assistance was once again provided. This means that living in the ‘donut hole’ requires enormous out of pocket expenses for participants.

Only 20% of Medicare Part D providers offer any kind of gap coverage. This leaves an incredibly large remainder to struggle with paying for their prescription needs.

The elimination of the gap is all part of the current Health Care Reform Act. President Obama has said that there will be approximately 4 million Part D beneficiaries that will receive the $250 rebate checks by years end.

While this doesn’t completely eliminate the disparity between the two thresholds many see it as a signal that Medicare will be helping more individuals cope as the Health Care overhaul comes into its own.

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