Medicare Part D Prescription Drug Plans

Coverage Gap

The Coverage Gap or Donut Hole is the most controversial part of Medicare and a major concern to many seniors in Central Florida. Driving this concern is that most Medicare Prescription Drug Plans have a Donut Hole and many do not understand how it works, even those who deal with Medicare every day.

When you have a Medicare Prescription Drug Plan, whether built into a Medicare Advantage Plan or in addition to Original Medicare or a Medicare Supplement, Medicare will track two numbers. The first is the Total Retail Cost of your medications. Total Retail Cost is what you pay plus what the insurance company pays every time you get a prescription filled. When your Total Retail Cost reaches $2,930 in 2012 you will enter the Donut Hole and have to pay 50% of the cost for covered brand-name medications and 86% of the cost for covered generic medications.

The second number tracked by Medicare is called True-Out-of-Pocket. True-Out-of-Pocket is what you have paid to get your prescriptions filled and include deductibles, co-payments and coinsurance. If your Medicare Prescription Drug Plan has a premium it is not counted in calculating your True-Out-of-Pocket. When your True-Out-of-Pocket reaches $4,700 you get Catastrophic Coverage and your Medicare Prescription Drug Plan will pay for most of the cost of your covered medications for the rest of the year.

Not everyone will enter the Coverage Gap.