The Medicare Part D coverage gap — informally known as the Medicare donut hole — is the difference of the initial coverage limit and the catastrophic coverage threshold, as described in the Medicare Part D prescription drug program administered by the United States federal government. After a Medicare beneficiary surpasses the prescription drug coverage limit, the Medicare beneficiary is financially responsible for the entire cost of prescription drugs until the expense reaches
Total drug spend” represents the actual cost of the drugs purchased, factoring in any Medicare discounts.
“TrOOP” (true out-of-pocket expenses) represents the amount of their own money that the patient has paid.
The donut hole is shown below in grey.
Beginning January 1st, 2011, if a person reached the gap in their Medicare Part D coverage, they were able to receive a 50% discount on covered name-brand medications. There was also a one-time tax-free rebate of $250 given to those individuals who had to pay for their prescriptions in the donut hole gap (U.S. Department of Health & Human Services). The coverage gap has a plan until the year 2020 to reduce the amount of out-of-pocket expense. The following is a listing of the future percentages for out of pocket costs in prescriptions (U.S. Department of Health & Human Services):
• 2012: 50% brand-name-86% generic
• 2013: 47.5% brand-name-79% generic
• 2014: 47.5% brand-name-72% generic
• 2015: 45% brand-name-65% generic
• 2016: 45% brand name-58% generic
• 2017: 40% brand-name-51% generic
• 2018: 35% brand name-44% generic
• 2019: 30% brand-name-37% generic
• 2020: 25% brand-name-25% generic
This future out-of-pocket percentages don’t eliminate the cost completely, but they do significantly reduce the amount of money a person with Medicare Part D coverage will have to pay out-of-pocket.