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Closing the “donut hole” in your Medicare Prescription Drug Plan.

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The Affordable Care Act gradually lowers your out-of-pocket spending by providing 50% manufacturer discounts on brand-name drugs along with additional plan payments on any covered drugs filled in the gap.

  • In 2017, Part D enrollees in plans with no additional gap coverage will only pay 40% of the plan’s cost for brands and 51% of the plan’s cost for generics in the gap until they’ve reached the catastrophic coverage threshold.
  • Medicare will phase in additional subsidies for brands and generic drugs, over the next few years.
  • Ultimately reducing the beneficiary coinsurance rate to 25% closing the gap in 2020.

Considering recent events

In the debate over repealing and replacing Obamacare.

What will happen to the ACA enhancements related to the federal Medicare program?

Let’s look-at these benefit improvements:

What is the coverage gap?

And, how will I know if I’ve reached it?

Most Medicare drug plan enrollees are subject to a temporary reduction in benefits known as the “donut hole”.

  • This means that after enrollees, and their plan’s, combined spending reaches a certain amount of money for the year, enrollees’ may have to pay more for covered drugs (while they’re in the gap) up-to a certain limit.
  • Each month enrollees fill any prescription(s) their plan mails an Explanation of Benefits (EOB) notice —itemizing how much has been spent on covered drugs, and letting them know when they’ve reached the coverage gap, referred to as the “donut hole”.

Who can get the savings while in the gap?

Anyone who doesn’t already get “Extra Help” —or, Limited Income Subsidies (LIS), from Social Security.

Benefits in 2017: the Part D standard benefit has a $400 deductible and 25% coinsurance up to the initial coverage limit of $3,700 in total drug costs, followed by the gap. During the gap, enrollees are responsible for a larger share of their total drug costs than in the initial coverage period, until their total out-of-pocket spending in 2017 reaches $4,950.

How does this discount work for brand name drugs?

Companies that make brands must sign agreements with Medicare, to participate in the Medicare Coverage Gap Discount Program.

  • This voluntary program requires manufacturers to offer discounts on their brands in the gap.
  • In addition, you will only pay 40% of the plan’s cost for covered brands in 2017.

Again, you only pay the certain percentage; but, your copays (and the manufacturers discount) both count toward moving you into the catastrophic coverage threshold.

Example: Ms Griffin reaches the coverage gap in her drug plan. Her covered brand is $60 and there’s a $2 dispensing fee that gets added. The drug The drug copayment ($60 x .40=$24) —along with the dispensing fee of ($2 x .40=.80) equals $24.80 out-of-pocket cost.

Note: Her $24.80 and the manufacturer discount ($30.00 in this example) both count as TrOOP spending.

The remaining $7.20 which is 10% of the drug cost and 60% of the dispensing fee (paid by the plan) isn’t counted as TrOOP spending.

Will all of my covered brands be discounted?

If a drug manufacturer has signed an agreement to participate in the Medicare Coverage Gap Discount Program, all the covered brand-name drugs they make are included for this calendar year including the brands listed in the plan’s formulary, and those covered by an exception.

Which includes the brands listed in the plan’s formulary, and those covered by an exception.

Participating manufacturers’ make more than 99% of the brand-name drugs used by Medicare enrollees.

How is coverage for generic changing in the gap?

In 2017 you will pay 51% of the plan’s price during the gap. What you will pay for generic drugs in the gap will decrease each year until it’s reduced to 25% in 2020. For generics’ only what you pay counts towards your TrOOP spending.

Example: Mr Adams reaches the coverage gap in his Medicare drug plan. He fill his prescription for a generic. The plan’s cost for the drug is $20 —and there’s a $2 dispensing fee added to the cost. Mr Adams will pay 51% ($22 x .51=$11.22) of the cost.

His TrOOP spending, in this scenario, is the same $11.22 —which will count towards getting him out of the gap.

What if I don’t get a discount, but I think I should?

If you’ve reached the gap and don’t get a discount, review your last EOB notice. If the discount doesn’t appear on the notice, contact your plan to make sure your records are current and correct.

If your plan doesn’t agree, you can appeal. To file an appeal contact your local SHIP office, or call Medicare at 800-663-4227, TTYs should call 877-486-2048.

Visit www.medicare.gov, or look back over your “Medicare & You handbook”, to get the phone number for your local SHIP office.

What if I have other health coverage?

If the other coverage pays second, it’ll pay after you get the discount.

What if I have coverage from a State Pharmacy Assistance Program (SPAP)?

Enrollees in a State Pharmacy Assistant Program (SPAP). Or any other program which gives discounts for Part D drugs (other than Extra Help) will get the gap discount on brands. The gap discount is applied before any other coverage.

I already get discounts from the company that makes my drug(s) … How will this program effect these discounts?

Some manufacturers offer patient assistance programs which are different from the Medicare Coverage Gap Discount Program. Check with the company to find-out if their assistance program will change, whenever you reach the gap.

What if I’m enrolled in a plan that already includes enhanced gap coverage?

You may get a discount after your plan’s coverage has been applied. The program discount will be applied to the remaining amount you owe.

Example: If your plan offers 60% brand coverage in the gap, and you fill a $100 prescription, after the plans savings, the 50% manufacturer discount gets applied to your 40% so, you’ll only pay $20.

Keep in mind, the entire 40% (the $20 you pay plus the manufacturer discount) both count as (TrOOP) spending.

If I get Extra Help from Social Security, will I get the manufacture discount too?

No again, you already get gap coverage.

What happens if only part of the cost is in the gap threshold?

The discount will apply to the part that’s in the gap threshold.

Example: You need a $100 brand and only $50 falls in the gap. The discount and increased coverage only applies to the $50 that’s in the threshold. You’ll pay the normal copayment on the first $50, plus $10 on the gap $50.

How will I know if my brand will be covered at a discount, and what should I do if it isn’t?

Visit with your plan, or ask the pharmacist … If it’s made by a participating manufacturer you’re okay. If not, the drug won’t be covered by Part D at all.

If the drug’s not covered, visit with your doctor or other healthcare provider to find-out if there’s another drug you can take.

Congress proposed the American Health Care Act (AHCA) which recently passed the House Energy & Commerce and Ways & Means Committees, leaving most ACA changes to Medicare intact.

The GOP plan Includes the benefit improvements (no-cost preventative services and closing the Part D coverage gap), and reduces payments to healthcare providers, Medicare Advantage Plans, the independent Advisory Board, and the Center for Medicare and Medicaid innovation.

We’re still waiting on a House vote which Speaker Ryan says “is going to happen soon”.

Copyright by Medicare Amarillo 2019.