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Medicare Part D Doughnut Hole Is NOT Going Away

Medicare Part D Doughnut Hole Is NOT Going Away!



It has been widely reported by the media that Obamacare is closing the Medicare Part D prescription drug plan coverage gap or “doughnut hole”, in 10 years. According to the reports the doughnut hole “will effectively be closed”.

Medicare Part D Some Facts

But not so fast! Let’s look at the facts. In 2010 beneficiaries got a $250 check if they fell into the doughnut hole. Starting in 2011, the manufacturers gave a 50% discount on all brand name drugs for people who fell into the doughnut hole. This was a deal with the White House, which will net the drug companies billions in price concessions.

Medicare Part D Over 10 Years

In 2013, Obamacare starts to subsidize brand name drugs at 2.5% for Medicare Part D beneficiaries who hit the doughnut hole. Each year after, it will slowly increase until 2020 when the subsidy will be 25%. Generics will also be subsidized up to 75% by 2020. So according to reports, in 10 years “the doughnut hole will effectively be closed”. But beneficiaries are still paying 25% of the cost of their prescriptions. To me, this is a play on words. If you’re paying 25% for the cost of your drugs, the coverage gap didn’t go away. I suppose this is another way to justify Obamacare and the deals it has made with the Pharmaceutical companies. Reference: 1) 2) (Exhibit 7. Prescription Drug Benefit, 2020) ————— The author, John Giarratano is a Pueblo Colorado native and Independent Health Insurance Agent that specializes in Medicare healthcare solutions. He has lived in Pueblo Colorado all his life. He has over 12 years experience in healthcare insurance. If you live in the Pueblo Colorado area please call him for a no obligation discussion about your best Medicare options.

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John Giarratano

John Giarratano (719-560-1406). As an Independent Insurance Agent, John's job is to help educate on your supplemental options, answer questions, and provide customer service after you enroll.

Comments (2)

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    Dennis Byron


    You’re right and there are two major implications no one is thinking through:

    1. Many seniors who reach the hole today think there will be two steps when “the hole is closed” and that they will more closely reach the 6% co-pay level. Your graph shows that that is not the case. (However, good news and little known fact: only about 5% of seniors ever actually reach the donut hole today. Only 1% go all the way through it. Although that means the latter group is terribly ill, the problem statistically is just no big deal.)

    2. the price of generics might rise in the out years when you reach the hole as compared to when you are in the initial phase, As you know as an insurance agent the 25/75 split in the initial phase is just a guideline and many plans have no deductibles and the co-pays tend to ge the same for all generics, whether or not that is 25% of the retail price. So a $100 bottle of Simvulstatin might end up being $4.95 in the inital phase and $25 “in the hole.” That doesn’t sound like such a big deal but no one has thought through all the permutations of this.

    (Then there is the deceit on the part of the politicians who keep saying the hole is closed but that’s just politics.)


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