“Donut Hole” Medicare Guide: 5 Tips to Avoid the Coverage Gap

Many Medicare program participants have heard of the “Donut Hole” or coverage gap, but are unsure how to avoid it. The Donut Hole is a term used to describe a period in which Medicare recipients must pay for all prescriptions out-of-pocket, with only limited government assistance.

The Donut Hole starts after both you and your prescription drug plan have spent a specified amount on drugs. In 2023, that number is $4,660. Once that number is reached, you will find yourself in the coverage gap.

Once in the coverage gap, you may pay up to 25% of your prescription drug’s cost.

You’ll reach the other side of the gap once you have spent $7,400 out-of-pocket.

 

In this post, we’ll discuss some strategies that will help Medicare recipients save money and avoid the donut hole!

It’s important to note that the Donut Hole applies to both separate Part D plans and those associated with Medicare Advantage plans.

There are five strategies to avoid the Donut Hole or Part D Coverage Gap.

1. Use generic medications instead of brand names if possible.

Talk to your pharmacist about how much it would cost if you switched to a generic version of your medication. 

The average savings in a generic scenario is around $1000 per year for one person, but it varies depending on the medication.

The Food and Drug Administration requires generic drugs to have the same ingredients as their brand-name counterparts. They will also have the same dosage, be administered the same way, and have the same effect.

2. Make sure you’re using the right pharmacy or even consider ordering your medications online.

The pharmacy you typically go to may not be the most affordable option.

Talk with either your licensed insurance agent or your pharmacist about how much an out-of-network pharmacy would cost if it’s more expensive than a local one. This should also be discussed during your renewal period as prescription drug plans change each year. Your agent can check pharmacies in your zip code to find the one that works best with your prescription drug coverage.

Prescription drug plans associated with Medicare Part D may even offer a discount if the member orders a 3-month supply by mail instead of picking up a shorter, monthly prescription directly from the pharmacy.

Another option would be to ask if your pharmacy can offer you a 90-day supply of your prescription at the same price as the mail-order prescription. Not all drugs can be ordered in bulk, but it is worth asking.

3. Ask for manufacturer’s discounts, inside or outside of the coverage gap.

It never hurts to ask!

There are some pharmaceutical companies that offer discounts when their drugs are sold directly to consumers or through provider’s offices. This is especially common for specialty and brand-name medications, which are associated with a higher cost.

Your doctor should be able to tell you if there are any cost-saving methods or discounts available. You may also find this information online from the drug manufacturer’s website.

4. Consider switching your Part D Prescription Drug Plan during the Annual Election Period.

The Annual Election Period (AEP) is from October 15 to December 7 every year. (It is also referred to as the Annual Enrollment Period.) At this time, you will want to make an appointment with your insurance agent to review the current plan of your insurance company. At this time, you are eligible to enroll in a new plan.

Your current plan will send you an Annual Notice of Change prior to the AEP. This notice will contain the benefit changes in your current plan. It is important to review this as most plans do change each year and your current plan may no longer be the best one for you.

The Annual Election Period is your chance to find a better Medicare Part D prescription drug plan.

 

5. Look into state assistance programs or apply for Extra Help.

Medicare has a Low-Income Subsidy Program (also called Extra Help) that offers financial assistance with Part D costs. There are qualifications an applicant must meet in order to qualify for help, and they may change each year.

An important thing to note is that you can apply for Extra Help even if you are not enrolled in Medicare Part D. Applying for extra help will not automatically enroll you in a prescription drug plan.

Some states also offer other assistance programs with their own qualifications, including Medicaid services.

Bonus Tip: Use Medicare’s Catastrophic Coverage.

Once you have spent the $7,400 on prescription drugs out-of-pocket to reach the other side of the coverage gap, you will automatically receive Medicare’s catastrophic coverage. This means that you will have just a small cost for your covered drugs for the remainder of the year.

If you would like to discuss your prescription drug plan and prescription drug costs, call our office to schedule an appointment with your agent.

Contact Sunflower Insurance Solutions at: 785-301-2716