Medicare and the Donut Hole

And Now a Word about Medicare and the Donut Hole 

For those of you approaching 60 +, here is something you need to know about. This comes from one of my readers down south in North Carolina (how do you people stand it down there with all that humidity?) They work at firm in conjunction with a pharmaceutical firm and they submitted this for my consideration and it is something we all should now about in life (what this blog is about - Thoughts on life of whatever nature)

For those of you approaching that age where Medicare may become part of your life, you need to know about the Donut Hole. Insurance for Medicare (Like AARP) Part D has four levels. Deductible, Initial, Coverage Gap (the Donut Hole), and Catastrophic. (I am not going into Part B etc as that is not the focus today). This discussion ONLY covers Prescription Drugs, not any other medical coverage.

Phase 1 Deductible - When you start using Medicare Part D , the Deductible Phase is exactly what it sounds like, you have a deductible to meet. Some plans do not charge a deductible. Easy enough.

Phase 2 Initial - When you meet your deductible (assuming you had one) you enter the Initial Phase. At that point you simply pay the copay. The copay depends upon whether the prescription is Brand or Generic and its Tier. No need to explain Brand vs. Generic but a word about Tiers. Tiers are levels that the insurance company sets. Simple relatively inexpensive drugs are Tier 1. Higher tier drugs such as 2, 3, and 4 are more expensive. You don't want to know about Tier 5 and 6, really, some plans don't even cover them.

Phase 3 The Coverage Gap ( aka The Donut Hole) - BUT as you go along, at some point you will look down and notice that the copay for that prescription suddenly jumped anticlimactically – as in doubled!! You walk up to the pharmacist and want to know WHAT HAPPENED? Why is my copay doubled? (My source deals with these calls all the time from insurance members and pharmacists trying to confirm the Donut Hole) . The Pharmacist makes a call (to somebody like my reader) and they look up your information and confirm it to the Pharmacist and they tell you you are in the Coverage Gap or Donut hole. WHAT THE #%^ is that??

The Coverage Gap (Don't ask why it is called the Donut Hole as nobody seems to know but the terms is widely know throughout the industry.) is when the amount of money spent by you AND the insurance plan reaches $2970.00 for 2013) The amount of money BOTH of you have spent is called your TDE or Total Drug Expenditure. It is IMPORTANT to note, it is the Total of what you AND the insurance company have spent for your prescriptions for the year to date.

When you reach that point, you pay approximately half the cost of the drug. That is how my reader and Pharmacists have a hint you are in the Donut Hole, the copay doubled from what it was.

4. Catastrophic Phase - The next and last Phase is the Catastrophic Phase. This means you finances are a catastrophe and you are just about broke from prescription bills. When you get into the Catastrophic Phase you pay 5% of the Cost of Approved cost of the medicine with a minimum usually of $2.65 for generic and $6.65 for Brand name medicine. Sound good right? Well, some medicines cost $6500 for a three month supply so your copay is still $325 or more. He tells me one drug not covered yet by insurance costs $1500 for a three month supply!!

IMPORTANT (as in the point of all this) So how do you get from the Coverage Gap (Donut Hole) to Catastrophic with the lower copays? (You aren't going to like this.) You get out of the Donut Hole when your TROOP (Total Out OF Pocket) expenses reach $4970 (for 2013). Sounds Ok, $4970 - $2950 = HOLD ON!!! BAD MATH!!. You go into the Donut Hole based upon your TDE which is BOTH your money and the Insurance Plan's money. BUT getting OUT is based SOLEY upon YOUR Money! So when your TDE reaches say $3000, you are in the Donut Hole but your Troop at that moment may only be $450.00 WAIT you mean all that TDE doesn’t count?? That's right. Only YOUR money spent counts. This means you have a long way to go until YOU SPEND $4970 OUT OF YOUR POCKET!! (You may now put the nitro pill under your tongue).

The reader reports people reaching the Donut Hole will start ordering their medicine based not upon what they do but upon cost. I.E. they buy several inexpensive ones but don't buy the expensive ones like heart medicine until next month or later. (Dumb but sometimes all one can do). They report one lady told them that a customer said that when they reach the Donut Hole, it is like playing Russian Roulette ordering which prescription to get each month.

So what can you do about all this? First, simply knowing what will happen helps. Second when you go to get a Medicare Supplement, ask about coverage in the Donut Hole (You may want to say Coverage Gap as Insurance agents are not as familiar with the term. They just sell it).

One tip my reader gives us. Your Medicare resets every year on January first. This means that toward the end of the year, like in November through December, you want don't want to order refills that extend over into January other than a few days IF you are in the Coverage Gap. Coverage Gap people can order a 60 day supply on November 1 or a 30 day supply on December 1. This minimizes the impact of the Coverage Gap on you pocket. In January you will have to meet your deducible if you have one but almost anything beats the Coverage Gap.

At that point, Good Luck.