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Medicare Plan Review

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What's the donut hole? Good question - we'll explain

Most Medicare Part D drug plans have a coverage gap - also known as the "donut hole" - which limits what the drug plan will cover after a certain dollar amount is reached.

In 2014, once you and your plan spend $2,8502 on covered drugs (the combined amount plus your deductible), you'll be in the coverage gap. The gap extends until you reach $4,550 in out-of-pocket costs, at which point you are in what's called catastrophic coverage.

Donut Hole Graphic

The good news: pharmacies like Walgreens provide discounted prescriptions for Part D recipients in the coverage gap.

Brand-name vs. generic discounts

For covered brand-name prescription drugs, your 2014 discount is 52.5%. You pay 47.5%, but the entire price counts as out-of-pocket costs, which helps you get out of the donut hole.

For generic prescription drugs, you'll pay 72% of the cost in 2014. (This amount will decrease each year until it reaches 25% in 2020.) With generic drugs, only the amount you pay counts towards getting you out of the donut hole.

There's no need to apply for these coverage gap discounts or fill out any forms.

Who qualifies to receive these discounts?

You're eligible if: A) you are enrolled in a Medicare prescription drug plan or a Medicare Advantage plan that includes prescription drugs, and B) you dont receive Extra Help, a Medicare program to help people with limited income.

You'll receive the discounts on the drugs covered by your plan once you reach the coverage gap.

What are my obligations?

You'll need to pay your premiums and your non-covered brand-name and generic drug costs from the time you meet your deductible (if your plan has one) until you reach catastrophic coverage. If your costs exceed the catastrophic coverage level, you'll be responsible for 5% of your prescription drug costs for the rest of the year.

Your yearly deductible, coinsurance and copays all count towards the coverage gap.

Here's what doesn't count:

  • Your drug plan premium
  • The pharmacy dispensing fee
  • What you pay for drugs that aren't covered

Have any additional questions? See your neighborhood Walgreens pharmacist.

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1 Information provided by Walgreens is not a substitute for your own research concerning your health care, including Medicare.

2 Source: