Medicare Donut Hole Changes in 2019
What You Need to Know Now

Farewell Medicare Donut Hole!

Medicare Donut Hole Changes in 2019

Ever since Medicare Part D rolled out in 2006, beneficiaries with high drug expenses have dreaded the donut hole. While we have certainly been grateful to even have drug coverage (since people on Medicare prior to 2006 did not), we still dread that part of the year when our medications become more expensive because we have hit the coverage gap.

The closing of Donut Hole WON'T guarantee you savings!


Insurance companies are not in the business of losing money. Trust me on that.


The insurance carriers will move drugs to different coverage tries from year to year. Just because your drugs are covered, it certainly doesn’t mean that’s your best bet. It could be covered at a lower cost on a different plan.

Medicare Donut Hole Changes in 2019

This reminds me of my client Linda. She was very loyal to her insurance carrier, after all, they had covered her through a pretty serious health event. When we met, her Rx expenses were staggering, and they were considering a reverse mortgage just to have the resources for her expensive drugs. You see her insurance carrier never told her that if she changed plans she’d save money. Her drugs had been moved to higher tries, costing her more every year. After a thorough analysis, she followed my recommendation and that first year she saved nearly $1500 a month and now she’ one of the first to book her annual review. 

Open Enrollment starts October 15th and providers will be officially sharing their new plans. Like I do every year, I will sit down with Linda to review her current medications and health needs to find the plan that gives her the best coverage at the very best price. 


I have written this article help you be a good consumer of the healthcare benefits you deserve. Below I outline some of the big changes happening in 2019.  If you have any questions, my phone is at the top of this page. Don't hesitate to call. This stuff is complicated. 

 

Annual Enrollment ​has ended.
To get all the benefits you deserve in 2019, you need to start preparing NOW!

Why the Donut Hole is Closing for Brand-Name Meds


When Part D was created, beneficiaries originally paid 100% of the cost of their brand-name drugs when they hit the coverage gap.


Under the Affordable Care Act, the donut hole has slowly been closing each year up until 2020.  However, under the new Budget Act of 2018, the donut hole which significantly increase prescriptions cost, will close for brand-name medications at the end of this year.


This is welcome news to Medicare beneficiaries who routinely experience high brand-name prescription medication costs each year.

The Donut Hole was originally created to get seniors’ participation in keeping drug costs low. Having a coverage gap encourages individuals to ask for generic drugs whenever possible. This keeps costs down for both Medicare beneficiaries and the federal government.

However, for those people with illnesses requiring brand-name medications, the donut hole has often been a hardship. There are many new medications on the market that are years away from their patent expiring. Some of these medications work so well that there aren’t very good alternatives.

Medicare Donut Hole Changes in 2019

This has resulted in Medicare beneficiaries having to choose between medications that work but cost a fortune and less expensive medications that maybe don’t work quite as well. If people choose not to take their medications during the gap because they can’t afford them, this could potentially result in higher costs to Medicare down the road when subsequent further illness occurs.


Having helped Medicare beneficiaries with Part D drug plans since the program’s inception in 2006, I have seen many people make these difficult choices. We constantly research options for our clients year after year to insure they were getting the best coverage possible.

 

The gap has certainly been effective in helping people see the value of generic drugs. However, there has always been a certain percentage of the Medicare beneficiary population who really have no choice because there wasn’t an alternative.

Shifting the Cost to the Drug Companies


Under the current Part D standard model structure, Part D plans have an annual deductible and then the plan pays 75% of the cost of your medications (and you pay the other 25%) until you hit the coverage gap. Once in the gap, you pay 35% of the cost of brand-name drugs and 44% of generics. Catastrophic coverage kicks in when you have spent $5000 out of pocket. Thereafter you pay only 5% of the cost of your medications.

The Current Model

The higher percentage for generic drugs isn’t the issue, as those are low-cost to begin with. It’s the higher percentage that seniors pay toward brand-name medications in the gap that has been the killer.

The New Model

Under the new budget deal, the plans will continue to pay 75% of the brand-name drug expenses until a beneficiary reaches the catastrophic limit. The legislation thus figuratively “closes” the donut hole by requiring some drug manufacturers to bear more of the costs for Part D enrollees when they reach the gap. Enrollees will only pay 25% of the cost of their brand name prescriptions.


So, while technically the coverage gap is still a stage of Part D plans, it will no longer affect your brand-name medications. You will pay 37% of the cost of generics in the gap next year, but again the generic drugs, which already have lower costs, have not been the hardship for most people in the gap.


The drug manufacturers will foot the bill for this. In 2018, these manufacturers absorb only 50% of the cost of these brand-name medications in the gap. Beginning in 2019 under the new legislation, these companies will now take on 70%, so some of the costs of those drugs have been shifted back to the manufacturer.

Potential Outcomes (what this all means) 


It remains to be seen how this change might affect: 1) the cost of the medication themselves, which drugs will be included on a plans formulary and the tier co-pays and 2) the cost of the Part D drug plans in 2019. Take the time and thoroughly investigate your options. We are very hopeful that this change will be a positive one. We have many clients who will be happy the Medicare donut hole is going away.

 

The bill also repeals caps on rehabilitative services and expands Medicare’s ability to offer telemedicine services. It also does away with the Independent Payment Advisory Board – the so-called “death panel” created by the Affordable Care Act.


Medicare Advantage plans got welcome news too. They will now be able to offer a wider choice of benefits (supplemental care management options) for chronically ill individuals.


To help fund the budget deal, high-income Medicare beneficiaries earning more than $500K individually or $750K as a married couple will pay more for Parts B and D than they do now.

The closing of Donut Hole won’t guarantee you savings!


Just don’t expect your insurance carrier to tell you what plan is best for you, they are banking on you staying put.


Being a good consumer starts by being informed and organized….


Do you think being organized makes your life easier and helps you make a better decision about your healthcare?


We understand this stuff is complicated. Sifting through the insurance carriers marketing material can be overwhelming. Gathering plan information, formularies and calculating co-pays is a pretty daunting task.


I know sometimes it feels easier to put your head in the sand than have to deal with the frustration of looking at your Medicare Annual Enrollment Options.  I felt this too when I was a caregiver for my grandmother. Back then I didn't have anybody to guide me and she missed out on benefits that would have made a difference in her care.  

Annual Enrollment has ended.
To get all the benefits you deserve in 2019, you need to start preparing NOW!

We have found you can get More Benefits and/or Pay Less Money by taking a couple of minutes to get organized today with the right information.


This is why I now help people like you Empower Yourself to make Annual Enrollment painless and easy with a FREE Make Medicare Work Organizer.


In addition to the FREE Medicare Organizer, you have access to our team to ask any questions about your coverage, your plan, or your options. Our services are always free, really, they're free.

Meet Denise


Hi, I’m Denise Anderson

Medicare Donut Hole Changes in 2019

Medicare Supplement Accredited Advisor

Your Medicare Guru & Concierge

I am a mother, a daughter and a caregiver. I believe in treating others as you want to be treated. In our agency everyone is treated like family. 


I’m the Managing Broker at Make Medicare Work (a division of J. Johnston Ins. Svc, Inc.) and a Medicare Supplement Accredited Advisor.

My agency has helped thousands of Medicare beneficiaries properly enroll in Medicare and understand their benefits options at no charge. Collectively, my team has nearly 100 years of experience.

Medicare Donut Hole Changes in 2019

I am a member of the Medicare Benefits Association as well as California Health Underwriters and National Health Underwriter association.


These organizations work tirelessly to help protect and improve Medicare.