For those approaching Medicare or those who are already covered by it, Medicare can be very confusing. Add in the Part D Donut Hole (or coverage gap) and all the rules, pieces and parts of Medicare can leave a patient feeling lost.
So, let’s break it down.
Medicare Part A covers inpatient hospital care, skilled nursing facilities, hospice, lab tests, surgery, and home health care.
Medicare Part B covers medical services from doctors, such as outpatient lab, X-rays, diagnostic and preventative services.
Medicare Part C is also called Medicare Advantage or an MA Plan. These plans (like an HMO or PPO) are another way to become insured once enrolled in Medicare. MA Plans provide all the coverage of Part A and Part B. However, the plans are offered by private insurance companies that have been approved by Medicare. Plans can include extra benefits or services, such as vision, dental and hearing.
Medicare Part D provides coverage for prescription drugs. It may sound simple on the surface, but Part D is tricky because it has four phases, one of which is the Donut Hole.
- Phase one, the deductible: During this time, you pay for the entire cost of your prescription drugs until you reach the initial coverage period.
- Phase two, the initial coverage period: Once your deductible is met, your Part D plan steps in to pay for a portion of your costs, leaving you with a copay or co-insurance cost.
- Phase three, the coverage gap or Donut Hole: After your total drug costs reach a certain cap, ($5,030 for most plans in 2024), you enter the Donut Hole. You are now responsible for 25% of the cost of your drugs. That includes your copay.
- Phase four, catastrophic coverage: Once the cost of your drugs reaches $8,000, you enter the Catastrophic phase, during which you will incur no out-of-pocket costs for the rest of the year.
The $8,000 limit is reached by combining:
- the amounts you paid during the deductible and initial coverage periods
- almost the full cost of the brand-name drugs purchased during the Donut Hole phase
- amounts paid by others on your behalf
- amounts paid by the State Pharmaceutical Assistance Program, AIDS Drug Assistance Program and the Indian Health Service
However, there are several costs that do not count toward the $8,000 cap. Those include:
- monthly premiums
- any payments on drugs made by your plan
- costs related to drugs not covered by Medicare
- drugs obtained by pharmacies outside your network
- the 75% discount applied to generic drugs
It’s a lot to keep track of. Thankfully, your Medicare Part D plan keeps a running tally, so you can always check to see how much you’ve spent before reaching the $8,000 limit.
The experienced team at UROne Benefits™ can help you find the right prescription coverage to meet your specific needs at no cost to you.
For more information on Medicare, visit medicare.gov.
