What is the Donut Hole In Medicare

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In this article, we are going to talk about what the donut hole Medicare is, and what it entails. We are also going to tackle some of the most important details that will explain further what is the Medicare donut hole, and how will it be able to help you in your medical needs.

What Is The Hole In Medicare?

It is when you reach the limit of the initial coverage period, when the money both you and your plan pay for your drugs reaches the dollar amount set by the law, which is $2,510 in 2008, and $2,700 in 2009. It is not just what you have paid; this point is often overlooked, or misunderstood, with the results that folks fall into the gap a lot sooner than they expect to.
So say for example that your co-pay for one of your prescription medicines is $25; during the initial coverage period, your plan pays the rest of the price it has negotiated for the drug – let us say $75. The full price of the drug is thus $25+$75 = $100. Thus, the $100, not the $25, counts toward the limit. What you have paid to the plan each month in the premiums just to receive coverage, does not count at all. This is now what we call the donut hole in Medicare.

You can get out of the gap as soon as your own out of the pocket spending on drugs and medications, since the beginning of the year reaches the limit set by the law, which is $4,050 in 2008 and $4,350 in the year 2009. In this case, what your plan has paid, does not count. Also, other rules outlines what counts as “out of the pocket” spending and what does not.

These payments count towards the coverage gap limit:
• Your initial deductible, if your plan has one, during phase 1
• If your co-pays or co-insurance in the initial coverage period in Phase 2 or in the donut hole Medicare, if your plan covers any of your drugs in the gap
• Out of the pocket payments that you have made in the donut hole Medicare for drugs bought through your plan at a pharmacy in your plan’s network in Phase 3.
• Payments for your drugs bought through your plan and made by a family member, a friend, a charitable group, or a state pharmacy assistance program

Any payment you make towards the cost of your drugs in the coverage gap when a third party (such as an employer or union plan, or a pharmaceutical company’s assistance program) picks up the rest of the tab.

Medicare Part D Donut Hole

Part D allows only payments for drugs covered by your plan and purchased them from a pharmacy within your plan’s network to count toward your out of the pocket limit in getting out of the coverage gap. For instance, say that you are taking four types of medicine (medicine A,B,C,D), but your plan only covers Medicine A, B and C, in the coverage gap, when you are paying for the full price, these three drugs costs a total of $200 a month, wherein every cent of which counts toward your out of the pocket limit.
If your overall drug costs are high, you need your payments in the gap to count, in order to reach catastrophic coverage as quick as possible. But if your cists are in the medium range, and you are pretty sure you will not get of the gap before the end of the year, or you cannot afford the money it takes to get out of the gap, you may feel that you have nothing to lose by getting lower cost drugs elsewhere.