Getting Around the Medicare Donut

Medicare Part D is an essential way for many seniors to pay for their prescription drugs. According to the 2009 Kaiser Family Foundation Medicare Part D Update, 60% of Medicare beneficiaries are enrolled in this plan. However, while the plan has reported success, a large number of beneficiaries run the risk of falling into the Medicare donut, which can adversely affect their ability to purchase vital medication. Advocates for seniors are working vigorously to push for health care reform that protects them from the donut, but in the meantime, seniors are look for ways to avoid it altogether.

Medicare Part D and the Donut Hole

In the whole scope of Medicare, Part D is relatively new. Enacted on Dec. 8, 2003 as a part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, it was established as a prescription drug benefit for Medicare recipients.

For the most part, the plan, which officially started Jan. 1, 2006, has been successful. According to the Kaiser update, it has helped to increase the total number of beneficiaries covered by a drug plan to 90%. However, included in the 2003 legislation was a gap in coverage – or donut hole – that ends federal payments of 75% for drug purchases once an annual spending limit is reached (in 2009, the limit is $2,700).

The federal assistance begins again only after the beneficiary pays True Out-of-Pocket Costs (TrOOP) to reach the catastrophic phase of coverage, which in 2009 meant reaching $6,153.75 in costs. In other words, the beneficiary must pay $3,453.75 for their drugs on their own before federal assistance will resume.

Recent research from the University of Pittsburgh Graduate School of Public Health showed evidence that one in four seniors enrolled in the Medicare Advantage drug plan alone hit the donut hole each year. Of that group, only 5% reach the catastrophic phase of coverage.

Having to pay hundreds or more a month on prescription drugs when costs may have been $50 monthly can be shocking to new enrollees, said Pamela Causey, director of communications with the National Committee to Preserve Social Security and Medicare (NCPSSM). “We hear stories of this all the time,” Causey explained. “Seniors are being blindsighted by this.”

Some may wonder why seniors were not warned of this donut. Causey explained that there is actually plenty of information about it on the Medicare website, including a plan comparison tool; however, many seniors won’t find it. “A lot of seniors are not on the computer,” she said. “They’re not comfortable using a comparison tool on the Internet.” As a result, many beneficiaries don’t realize that their plans will change once they reach their limit.

And those who do know feel helpless. “Some know it’s coming,” said David Lipschutz, staff attorney for California Health Advocates. “And there’s not much they can do about it.”

For some seniors, drastic measures like splitting pills or forgoing their medication altogether is the answer to the seemingly hopeless possibility of paying enough on their own to get out of the donut hole, said Paul Precht, director of policy and communications with the Medicare Rights Center. “Some are taking on dangerous strategies just to get by,” he said. “And others are maxing out cards to pay for the costs.”

Kaiser data shows that most seniors fall into the donut hole around July or August each year. However, depending on the costs associated with their care, some seniors find themselves in the hole earlier. “Those with chronic issues seem to reach it faster,” said Lipschutz. Beneficiaries with diabetes, in particular, suffer due to expensive insulin costs, he explained.

How to Get Around the Donut

According to the Kaiser update, only a small percentage of insurers offer coverage for seniors in the donut due to overwhelming costs. With very few insurers covering the sizable donut expenses, experts suggest other ways to finance prescriptions, some of which may actually count toward your TrOOP:

  1. “Extra Help”Some Medicare beneficiaries, depending on their income, may be eligible for a federal program called Extra Help, Precht explained. However, “there are income requirements for the program,” he said. According to the Social Security Online Extra Help page, annual income is limited to $16,245 for individuals and $21,855 for married couples living together. Those who do qualify are able to receive an average of $3,900 in assistance each year – more than enough to cover the costs of the donut hole.
  2. Medigap Programs (Gap Insurance)Medigap programs, or gap insurance programs, are designed to cover gaps costs while in the donut. They are sold and managed by private insurance companies and have subscriber fees. Currently, there are 12 programs (Plans A through L) and they cover basic benefits, as well as extras like home nursing care, at-home recovery and more.
  3. State Pharmaceutical Assistance Programs (SPAPs)According to recent data from the National Conference of State Legislatures (NCSL) Health Program, 23 operational programs offer seniors a direct subsidy and 19 states have programs that offer discounts. Causey suggested contacting your local Department of Aging for assistance in finding these programs. Lipschutz noted that you could also call the Medicare hotline for more information.
  4. Patient Assistance Programs (PAPs)There are a number of patient assistance programs (PAPs) funded by private pharmaceutical manufacturers that could assist beneficiaries in receiving their prescription drugs, explained Lipschutz. The American Society of Health-System Pharmacists is a comprehensive resource for beneficiaries looking to pay for drugs.
  5. Talk to Your DoctorExperts seem to suggest unanimously that talking to your doctor is a great step to take for assistance. “People can talk to their doctors to see if they qualify for generic drugs or samples,” said Lipschutz. Causey and Precht agreed that doctors often come up with affordable solutions.

Additionally, the experts suggested searching databases for programs, seeing if you’re eligible for assistance through Veterans or retiree programs and even buying free and low-cost generic drugs from local pharmacies if approved by your doctor.

Actions Being Taken in Congress

House Speaker Nancy Pelosi announced in late Oct. 2009 that plans are moving forward to negotiate a 50% discount on brand-name prescriptions for 2010 that could shrink out-of-pocket costs by $500. In addition, President Obama promises that the new health care reform will phase out the donut hole completely by 2019. This is good news for seniors.

Causey expressed hope that health care reform will successfully close the gap to provide seniors with the total assistance they deserve. “We recognize that these programs are lifelines for seniors in America,” she explained. “Seniors should not have to make choices between food and medication, it’s completely unacceptable.”