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May 9, 2013
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‘The doughnut hole’

In the continual discussion of health care and the Affordable Care Act, there is frequent reference to the “doughnut hole” of prescription drug costs. So just what is the donut hole?

Prescription drug benefits, Medicare Part D, became law in 2006 to help Medicare recipients with high drug costs not covered by Medicare Parts A or B or private insurance. In this plan, recipients paid an initial $320 deductible, then 25 percent of their medication costs until the costs to both recipient and drug plan reached $2,800. After $2,800, the beneficiary paid 100 percent of costs until the amount reached $4,550, considered a “catastrophic cost.” Medicare then covered all but 5 percent. The gap between $2,800 and $4,550 is the doughnut hole. Some recipients went without food or couldn’t pay rent once they entered the “hole.”

The Affordable Care Act has sought to alleviate this financial burden. Specifically, in 2011 Medicare began paying 50 percent of brand name drug costs and more for generics for people in the coverage gap. In 2013 Medicare began paying over 50 percent for brand name drugs. Costs to recipients will continue decreasing until 2020 when the doughnut hole will no longer exist.

Ellen MacDonald, Communications Committee

Nevada County Democrats


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The Union Updated Jun 6, 2013 11:45PM Published May 9, 2013 09:42PM Copyright 2013 The Union. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.