What Do Health Reform and Doughnut Holes Have to Do With Each Other?

By Karen Wintringham

Not immediately obvious, is it?  I admit I love donuts, and the smaller the doughnut hole the better. Turns out, beneficiaries we speak with feel the same way about their prescription drug coverage under Medicare Part D (as in “drugs” of the outpatient prescription variety).

When Medicare introduced the Part D outpatient prescription drug benefit in 2006, it included a provision called the Coverage Gap which became more commonly referred to as the “Donut Hole”.  As in the hole of a doughnut, nothing was covered by Medicare for a portion of the Part D coverage.  So each beneficiary had some amount of coverage, then entered the Doughnut Hole and had none from Medicare. Then if a person really used lots of prescription drugs and/or expensive ones, the person might exit the Doughnut Hole and go into Catastrophic Coverage.

Well, it turns out that not many people enter the Doughnut Hole each year (about 14% of beneficiaries).  But if someone does, especially early in the year, the lack of coverage is very important to them.

Health Reform, for whatever you may think of it, did include a provision which is improving the coverage in the Doughnut Hole.  Every year for 10 years, the coverage improves (the Doughnut Hole gets smaller).

For 2011 instead of being empty, the Medicare Doughnut Hole covers 50% of brand-name drug costs (plus a small processing fee) and provides a 7% discount on generic drugs.  For 2012, the generic discount increases to 14%. By 2020, all but 25% of brand-name (plus the processing fee) and 25% of generic drugs will be covered!

Ways to Handle the Doughnut Hole Until 2020:

1. Message to Self:  if you stop eating so many doughnuts you’d probably need fewer prescription drugs and maybe never enter the Doughnut Hole at all!  But seriously, if you can improve your eating habits and be more physically active, your need for prescriptions may be reduced sufficiently to avoid the Doughnut Hole.
2. Ask your physician if any of your prescriptions can be changed to generics – that will reduce your out-of-pocket costs and delay entry into the Doughnut Hole.
3. If despite #1 and #2 you will still be entering the Doughnut Hole, consider plans that help provide coverage beyond just Medicare when you do. 

Karen Wintringham, of Rochester Hills, is Vice President, Medicare Programs for HAP.  Her experience with her mother's challenges with Parkinson's have added a personal perspective to her many years of professional commitment to making Medicare work for Medicare beneficiaries and their caregivers. Karen is a featured speaker at the  on Saturday, October 15, 2011 at Suburban Collection Showplace in Novi.