Q1Medicare.com Provides Answers to the Top Medicare Part D Donut Hole Discount Questions

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Almost 4 million Seniors and other Medicare beneficiaries could reach the Donut Hole or Coverage Gap stage of their Medicare Part D prescription drug plan coverage in 2011. The Donut Hole portion of a Medicare Part D plan is when most Medicare beneficiaries are responsible for 100% of their prescription drug costs. However, 2011 marks the beginning of the Donut Hole discount where Medicare Part D plan members receive a 50% discount on brand-name drugs and a 7% discount on generic medications, potentially saving a person up to $1,875 a year. Since the Donut Hole discount raises new questions for many Medicare beneficiaries, Q1Medicare.com has added a section to their Frequently Asked Questions and updated their online Donut Hole planning tool to help Medicare beneficiaries better understand how the Donut Hole discount affects their Medicare Part D plan coverage.

People seem particularly confused as to how the discount is actually applied and how to calculate when they exit the Donut Hole.

Q1Medicare.com has added a new section to their “Frequently Asked Questions” addressing the Medicare Part D Donut Hole discount and has also updated their online Donut Hole planning tool to help people better understand how the discount may affect their Medicare Part D plan coverage.

As part of the new Affordable Care Act, most Medicare beneficiaries reaching the Donut Hole portion of their 2011 Medicare Part D prescription drug plan will automatically receive a 50% discount on all brand-name drugs and a 7% discount on all generic drugs, potentially saving a Medicare beneficiary up to $1,875 per year.

The Donut Hole or coverage gap is the stage of Medicare prescription drug plan coverage when most beneficiaries are 100% responsible for their own prescription drug costs. The 2011 Donut Hole begins when the total annual negotiated retail cost of a person’s prescription drugs exceeds $2,840. So, if a person’s average monthly retail prescription drug costs are under $237, they probably will not enter the 2011 Donut Hole, and will not receive the drug discount.

Although almost four million Medicare beneficiaries could reach the Donut Hole portion of their Medicare Part D plan coverage and receive the 2011 discount, beneficiaries who receive financial Extra-Help from Medicare are not eligible for the Donut Hole discount because they do not enter into a Donut Hole stage of their Medicare Part D plan coverage.

“We received so many questions from the Medicare community about the Donut Hole discount that we now have included some of the more popular topics in a dedicated Frequently Asked Questions section,” notes Dr. Susan Johnson, Technical Director and co-founder of Q1Group LLC. “People seem particularly confused as to how the discount is actually applied and how to calculate when they exit the Donut Hole.”

By design, receiving the Donut Hole discount is very simple. The 2011 Donut Hole Discount is applied automatically when someone purchases their medication. Medicare beneficiaries do not need to complete any forms or provide any additional information to their pharmacies.

Also, the Donut Hole discount does not affect or change when a beneficiary exits their Donut Hole. The full negotiated retail price (what the beneficiary pays plus the discount) is counted toward the beneficiary’s out-of-pocket spending (or TrOOP), which is used to determine when a person leaves their Donut Hole. For example, if the beneficiary were to purchase a brand-name medication with a negotiated retail price of $100, they would only be charged $50 at their pharmacy. However their Explanation of Benefits (or EOB) statement that they receive from their Part D plan would show the full $100 purchase counted toward exiting the Donut Hole. A Medicare beneficiary will exit the 2011 Donut Hole when their total out of pocket spending reaches $4,550.

To illustrate a beneficiary’s drug spending through the year, Q1Medicare.com also offers the 2011 PDP-Planner, found at PDP-Planner.com. Since the Donut Hole discount does not affect when a Medicare beneficiary leaves the Donut Hole, the Donut Hole discount is not included in the initial PDP-Planner chart and instead, a table below the monthly chart shows possible prescription drug savings based on combinations of name-brand and/or generic medication purchases. The results from PDP-Planner can be viewed online, printed or emailed to the user.

About the Q1Medicare.com Website
Q1Medicare.com is one of the largest independent online resources for Medicare Part D prescription drug plan and Medicare Advantage plan information. Q1Medicare offers a comprehensive section of Frequently Asked Questions, online tools, and a free Medicare Part D Newsletter all designed to help Medicare beneficiaries, caregivers, advocates, advisors, and insurance agents better understand the Medicare Part D and Medicare Advantage programs. Q1Medicare.com is operated by Q1Group LLC (Saint Augustine, Florida).

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Lynnea Christner

Susan Johnson MS-MIS, MBA, PhD
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