Speaker of the House Nancy Pelosi announced last week that the legislation proposed in the House will close the "donut hole" (the coverage gap) in Medicare Part D prescription drug coverage. Details below.
The "donut hole" requires persons on Medicare to pay a substantial portion of the cost for the prescription drugs. In an article for About.com, Michael Bihari, M.D., describes how the "donut hole" works for 2009:
If you join a Medicare prescription drug plan, you pay the first $295 of your drug costs. This is known as the deductible.
During the initial coverage phase, your drug plan pays 75% of the covered prescription drug costs after your deductible is met, and you pay 25% until the total drug costs (including your deductible) reach $2,700.
Once you reach $2,700 in total drug costs, you will be in the donut hole and you must pay the full cost of prescription drugs until your total out-of-pocket cost reaches $4,350. This annual out-of-pocket spending amount includes your yearly deductible and copay amounts.
When you spend more than $4,350 out-of-pocket, the coverage gap ends and your drug plan pays most of the costs of your covered drugs for the remainder of the year. You will be responsible for a copay of $2.40 for each generic drug and $6.00 for other drugs. This is known as catastrophic coverage.
On October 23 Speaker Pelosi announced that a provision would be added to the House health care financing bill to gradually close the donut hole. In a press release she stated:
Today, we’re announcing that our health insurance reform bill will begin closing the Medicare Part D ‘donut hole’ immediately. As of January 1, 2010, our legislation will give a 50 percent discount for brand-name drugs to recipients in the donut hole and it will reduce the size of the donut hole by $500. The House bill will completely eliminate the gap in coverage in 10 years – five years faster than was originally intended in HR 3200.
This will be one more element to be analyzed and compared when the final versions of the House and Senate health care bills are revealed.
