Part D drug benefit coverage gap slowly closing while drug premiums stay consistent.
Seniors with Medicare are increasingly saving more money on out-of-pocket costs for medications thanks to the 2010 Affordable Care Act, which made many improvements to Medicare, including additional benefits and more coverage.
The average 2013 monthly premium for basic prescription drug coverage is holding steady at about $30, the same as it was in 2012. Additionally, seniors and people with disabilities have saved $3.9 billion on prescription drugs as the Affordable Care Act began closing the “donut hole” coverage gap, reports the U.S. Department of Health and Human Services. The Department also reports that millions of people with Medicare are saving an average of over $600 each year on their prescription drugs.
The original standard Part D drug benefit contained a “donut hole”, a gap in coverage during which the amount a beneficiary pays for their prescriptions suddenly increases after they and their plan combined have paid a certain amount in drug costs (usually about $3,000).
Now, thanks to health care reform, if a person reaches the Part D coverage gap, they’ll get a 50 percent discount on covered brand-name drugs and some coverage for generic drugs in the gap. Coverage for both brand name and generic drugs in the coverage gap will continue to increase over time until 2020, when the coverage gap will be fully closed.
The new law provides the following assistance to help seniors bridge this donut hole, according to the National Committee to Preserve Social Security and Medicare:
- 50 percent rebate on brand-name drugs in 2012. A 50 percent rebate will be applied at the pharmacy for brand name medications.
- 14 percent rebate on generic drugs in 2012. A 14 percent rebate will be applied at the pharmacy for generic medications.
- Closure of the donut hole by 2020 for brand-name and generic drugs. The co-payments required for brand-name and generic drugs will be phased down to the standard 25 percent by 2020, eliminating the donut hole. For brand-name drugs, manufacturers will increase their discounts each year to negate the coverage gap. Beginning in 2011, co-payments required by Part D law for generic drugs will be reduced by seven percentage points each year until the coverage gap is eliminated for these drugs as well.
- Immediate assistance for seniors. A typical senior that fell into the donut hole saved $250 in 2010, over $600 in 2011, and will save over $3,000 by 2020.
- Provides catastrophic coverage sooner to protect seniors. The legislation will help seniors get out of the donut hole sooner beginning in 2014. The dollar amount of the catastrophic threshold, where seniors’ co-payments are dropped to 5 percent of drug costs, will be more slowly increased from year to year at this point.