MHI – Q: Should I be worried about the Donut Hole?

Posted by Jan
A: If you’re a professional worrier, I probably can’t stop you from worrying about the Donut Hole. Having said that, there is some encouraging news on the horizon.

If you reached the Donut Hole (also called the Coverage Gap) back when the Part D program started in 2006, you were responsible for paying 100 percent of your drug costs while you were in it. Thanks to legislation passed by Presidents Obama (Affordable Care Act) and Trump (Bipartisan Budget Act of 2018), your share of the cost in the Donut Hole has been on a steady decline.

It was possible to experience four different Part D cost-sharing levels in 2018 – Deductible, Initial Coverage Level, Donut Hole and Catastrophic Coverage. A proposed elimination of the Donut Hole by 2020 reduces the number of cost-sharing levels to three. Once the Donut Hole has been eliminated, you will pay the Initial Coverage Level copay unless/until you reach the Catastrophic Coverage Level.

People who reached the Donut Hole in 2018 paid 35 percent of their plan’s negotiated retail cost on their brand name medications and 44 percent on their generic medications.

The Donut Hole on brand name medications will be eliminated in 2019 – this year’s 35 percent copay will be lowered to a 25 percent copay for plans using the standard Part D benefit design. (Plans may deviate from the standard benefit design as long as they remain actuarially equivalent. As a result, your plan’s copay could be different.)

The Donut Hole on generic medications will be with us until 2020. Expect to pay a 37 percent copay for generics in 2019, and then 25 percent in 2020 (if your plan uses the Part D standard benefit design).

Getting back to you worriers, there actually is a little something worth bringing to your attention. Pharmaceutical companies are not happy about the additional costs they will face due to these Donut Hole reforms. Keep an eye on Washington to see if their lobbying efforts are effective.

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