How Can You Avoid the Medicare Part D Donut Hole?


Quick Answer

To avoid the Medicare Part D donut hole, Medicare recipients should try to lower their expenses by exploring alternative drugs that are therapeutically similar to the medications they are currently taking, advises AARP. Patients with limited resources may enroll in the Extra Help program to avoid the doughnut hole.

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Full Answer

The Extra Help Program benefits Medicare recipients who have limited income and resources and currently live in one of the 50 states or the District of Columbia, according to the Social Security Administration.

The Medicare doughnut hole refers to the larger copays a Medicare recipient pays when he has spent more than $2,850 on prescription drugs and less than $4,550, explains AARP. The Affordable Care Act of 2010 has provisions in place to shrink this doughnut hole annually until it fully disappears in 2020.

As of 2014, once a Medicare recipient reaches $2,850 in prescription drug costs, he must pay a 47.5 percent copay for brand-name drugs and a 72 percent copay for generic prescription drugs. The $2,850 includes the Medicare recipient's out-of-pocket payments as well as the money paid by his insurer. However, once the recipient spends $4,550 out of pocket on prescription drugs, he qualifies for catastrophic coverage and his copay lowers to 5 percent.

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