The Coverage Gap in Medicare Part D is Finally Closed
More than 61 million Americans are Medicare beneficiaries, and about 46 million of those are enrolled in Part D. The doughnut hole, more formally called the coverage gap, has been one of Part D’s more detested features since the drug benefit took effect in 2006.
Part D initially suspended coverage at a certain dollar threshold, forcing beneficiaries to pay out of pocket for drugs until they hit a second threshold and coverage resumed. In 2006, the coverage started after meeting the $250 deductible, participants paid 25 percent of the cost of each prescription between $251 and $2,250 and 100 percent between $2251 and $3,600, after which they qualified for catastrophic coverage and paid just 5 percent of the cost per drug. However, by last year, those thresholds had risen to $3,820 to fall into the gap and $5,100 to climb out which can be devastating to the patient.
The reason for all this is that, “It was designed that way because Congress had a self-imposed budget target,” said Tricia Neuman. In order to afford a low deductible, catastrophic coverage and protection for those with low incomes, lawmakers agreed to the doughnut hole.
Here is an explanation of the doughnut hole coverage. “You had coverage up until a certain dollar threshold, and then you didn’t,” said Jack Hoadley, a veteran drug policy researcher at Georgetown University. “People like to believe that once they have coverage, it continues.”
The Affordable Care Act began a decade-long effort to close that gap. In 2010, the Centers for Medicare and Medicaid Services estimated, 8 million Part D beneficiaries fell into the doughnut hole. To help out a little, in 2011, federal rules started lowering costs for beneficiaries and increasing discounts required from drug companies, gradually reducing what beneficiaries paid while in the hole. The final reduction, for generic drugs, slid into place on Jan. 1.
Now there is no coverage gap. Federal regulations require that your plan average 25 percent cost-sharing for any drug. Wonderfully, Part D premiums have remained stable for years; the proportion of Medicare beneficiaries with Part D has risen to nearly 75 percent, and now the doughnut hole has closed. “It’s great that the doughnut hole is closing,” Dr. Neuman said. “But people will continue to be exposed to very high drug costs without Congressional action.”