You may have heard that the “donut hole” is going away. The Medicare Part D coverage gap (also called the donut hole) was a built-in coverage gap in your Part D plan where you were responsible for paying more for drugs.
Basically, Part D coverage is divided into three sections:
- initial coverage period
- coverage gap (donut hole)
- catastrophic coverage
Before the Affordable Care Act passed in 2010, you were responsible for paying 100% of the costs during the coverage gap (donut hole.) Gradually, the percentage of the costs that you were responsible for during the coverage gap has decreased. In 2019, the coverage gap for brand name drugs ended, and in 2020 the coverage gap for generic drugs ended. This means that you will be responsible for 25% of the costs of prescriptions during the initial period and the coverage gap—until you reach the catastrophic coverage. During catastrophic coverage, you owe 5% of the costs.
What does this mean?
It means in 2021 that you will be responsible for 25% of the costs of generic and brand name drugs until you reach catastrophic coverage. It will reduce your costs during the coverage gap period, but you will still have costs during the coverage gap period. Your costs also could still be higher during the coverage gap period because during the initial coverage period drug plans charge copayments and coinsurance, instead of the 25% cost of the drug.
For example: Phoebe has a $25 copayment on her asthma inhaler during her initial coverage period. The full cost of the inhaler is $160. During the coverage gap period, she will owe 25% of the full cost, which is $40.
Remember if you have LIS or VPharm, your copayments will remain the same during the all phases of Part D coverage.
For example: Abby is on VPharm 1. She also needs an asthma inhaler. The full cost of the inhaler is $160. Abby’s copayment during initial coverage period is $2. Her copayment for it during the coverage gap period is also $2.