What is the Part D Medicare doughnut hole?

BY IRENE C. CARD and BETSY CHANDLER

NEWJERSEYNEWSROOM.COM

YOUR HEALTH INSURANCE

If you are enrolled in the Medicare Prescription Drug Plan, known as Part D Medicare, you know what the doughnut hole is. The doughnut hole is also known as the "coverage gap". This is when you are responsible for the full cost of your prescription drugs in the Medicare Prescription Drug Plan.

The gap begins when the total cost of your prescriptions reaches a specific amount. This total includes what both you and your plan have paid for covered drugs. In 2010, the coverage gap will begin when you and your plan together have paid $2,830. It means that at this point, you pay for the full cost of your drugs until that cost equals $4,550.

After the gap ends, you will have catastrophic coverage for the remainder of the calendar year. At this point, depending on your plan, you will pay 5 percent of the cost of each drug or $2.50 for generics and $6.30 for brand-name drugs, whichever is greater.

The new health care reform law also known, informally, as Obama's Health Care Reform, will close the coverage gap (the doughnut hole) by 2020. This law also requires that the Department of Health and Human Services (HHS), send a $250 rebate check to people who have entered the doughnut hole. This is a one-time only rebate. You will get this check automatically; there is no paperwork that you must first complete and if you should get a phone call asking for personal information, including a request for your Medicare number in order to process the rebate, do not give out any information over the telephone!

I repeat, do not give out any information over the telephone! HHS has your Medicare number, your name and your address and they will know when you enter the doughnut hole! If you should get such a phone call, report it at once to 1-800-MEDICARE.

The first set of checks will be mailed out in mid-June to people who have already entered the coverage gap. After that, HHS will send checks approximately once a month as more people enter the coverage gap. It is anticipated that all rebate checks will have been mailed to people who reached the coverage gap in 2010 by March, 2011. If you are getting extra help to pay for your Medicare drug costs, you will not be entitled to a rebate check.

Starting in 2011, the new law gives discounts on both brand-name and generic drugs to people who are in the doughnut hole. In 2011, you will be responsible for 50 percent of the cost of brand name drugs and 93 percent of the cost for generic drugs while you are in the doughnut hole or coverage gap. The amount you are responsible for will continue to decrease until 2020 at which time you will be responsible for 25 percent of the cost of both generic and brand name drugs, closing the gap completely.

These discounts will be applied automatically when a consumer in the coverage gap fills a prescription. No forms will be required to get the discounts. Keep in mind that 2020 is a long way off and Congress may or may not make changes between now and 2020.

Irene Card & Betsy Chandler are both licensed insurance professionals working at MIC Insurance Services, a health insurance services company. If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, browse our past columns on our web site at micinsurance.com.