Rising Drug Costs Send More Medicare Recipients into the “Donut Hole”

The donut hole — the point at which seniors have exhausted their basic benefit and must pay a larger share of the cost out of their own pocket — has been a financial trap door for beneficiaries, severely cutting back coverage after their drug costs reach a certain point then resuming only after those costs reach a “catastrophic” threshold. While the federal Affordable Care Act will eventually eliminate the gap, rising drug costs until then are sending more seniors into the hole.
“If you’re not paying attention to the explanation of benefits and you’ve been paying the same [co-payment] amount, then you would think you would get to the donut hole about the same time as last year,” said Shari Herrle, Director of Compliance for Henderson Brothers insurance agency, downtown. It all comes down to the formula Medicare uses to determine when someone hits the coverage gap, with a well-intentioned twist that seems to unfairly elongate how long people stay there. The calculation is based on both the price of the drug and the Part D beneficiary’s out-of-pocket cost. So rising drug prices speed up the member’s trip to the coverage gap, which is set at $2,960 this year (the amount increases to $3,310 in 2016).

Source/more: Pittsburgh Post-Gazette

David Wingate is an Elder Law Attorney at the Elder Law Office of David Wingate. The Elder Law office focuses in the following areas of law: powers od attorneys, wills, trusts, Medicaid, and asset protection. David Wingate practices in Frederick and Montgomery, Counties, Maryland.