Medicare and Donut Holes: Closing the Gaps in Your Coverage

January 23, 2017

Gaps in a donut are good. It means you can eat those cute little bite-sized donut holes  –  without the guilt.


But holes in your health insurance coverage are NOT good.

And many seniors on Medicare have these gaps.

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If you have Medicare Part D prescription drug coverage, you have a hole in your coverage, which means you have a period of time during which you have no prescription drug coverage, or at best, limited coverage.

Obviously, this is not good. If you’re in the “gap” period and your doctor starts you on a few new prescriptions, you’ll be subject to a surprising, new expense that’s not in your budget!

But don’t worry. You can fill this gap and avoid expensive medical bills with a better plan. Or if you’re about to enroll in a Medicare plan, you can choose wisely, and avoid the problem.

Here’s how the Medicare coverage gap, works:

  1. You and your provider spend a certain amount of money (outlined in your Medicare Part D policy) on prescription drugs.
  2. Once you meet this “limit,” you have to pay for prescription drugs out of pocket, at least until you meet the annual out-of-pocket limit.
  3. The costs that go toward this limit include coinsurance payments, deductible payments, and copayments. It does not include premiums, however.
  4. Your policy MAY cover generic drugs when you’re in the “gap,” but not all plans do.
  5. When you finally reach your out-of-pocket limit during the gap in coverage, then your catastrophic coverage will begin. During this time, you will usually only be required to pay a small coinsurance or copayment for the remainder of the year, until your plan’s limits begin again.

You can choose a prescription drug plan that offers decent coverage, or at least some coverage, in the gap period. The best thing to do is to carefully examine the medications a policy covers before you select a plan.

Fortunately, the donut hole will soon close, and you won’t have to deal with surprising prescription medication costs. The Affordable Care Act includes legislation designed to reduce the gap over the years, and close it by 2020. After that time, you will only have to pay 25 percent of prescription medication costs until you contribute enough to meet your out-of-pocket limit for the year.

Are you confused by Medicare terminology and have a hard time figuring out your plan’s limits? InsureOne Benefits is happy to help you calculate your plan’s limits and help you find a plan with better coverage  –  at least until 2020, when the donut hole will be closed!