The term donut hole is a synonym for the coverage gap some people experience with Medicare Part D prescription insurance. It refers to a period where a much greater percentage of prescription drug costs become out-of-pocket expenses, up to a certain limit. For example, as of June3 2015, the donut hole period begins when the total retail costs of covered prescription medication reaches $2,960 and ends when your out-of-pocket costs reach $4,700.
Although a first thought about how to avoid the donut hole might be to purchase Medicare Supplemental Insurance, these plans haven't included prescription drug coverage since 2006. Despite this, there are ways to avoid the donut hole completely or at least shorten its duration.
Switch to Generic Drugs
Medicare Part D deductibles and out-pocket expenses rules start over at the beginning of each year. Using generics can lengthen the time it takes to reach the donut hole or avoid reaching it completely.
- Ask your doctor about using generics whenever possible
- Get a printable drug list from your insurance company and use the interactive pricing tools that many insurance company websites provide to get cost information
Apply for the Medicare Extra Help Program
The Extra Help Program helps low-income Medicare recipients avoid the donut hole completely. According to the Social Security Administration, the program provides about $4,000 in cost assistance to each recipient per year. Income and financial resource limits apply, and both are re-evaluated annually. As of June 2015, annual income limits are $17,655 for an individual or $23,895 for a married couple. Financial resources, which include assets such as bank accounts, stocks and bonds, can't exceed $13,640 for an individual or $27,250 for a married couple. There are options to apply online, over the telephone or at your local Social Security Office.
If you find you can’t avoid the hole completely, but want to keep your Part D plan, look into Medicare Discount Coverage Program. If you purchase certain brand-name prescription drugs online or at a pharmacy, you’ll pay a certain percentage of the plan’s cost but your Medicare records will receive credit for most of the retail cost. Anyone who doesn’t get help through the Medicare Extra Help Program automatically qualifies.
Enroll in Medicare Part C
The donut hole only applies to Medicare Part D plans. You can avoid it completely by enrolling in a Medicare Part C Advantage plan instead of Medicare Part D. Just like with Medicare supplemental insurance, you purchase Medicare Part C through a private insurer. However, unlike with supplemental insurance, most Part C plans include an option to purchase prescription drug coverage. To qualify, you must have already enrolled in Medicare Part A hospital and Part B medical insurance, and must continue paying Part B insurance premiums.