COLUMBIA – Officially, the chasm in Medicare Part D's prescription coverage is called the coverage gap. However, thousands of senior citizens in Missouri know it by another name — the "donut hole."
Beginning last year, the U.S. Department of Health and Human Services implemented a plan to close the "donut hole" by 2020 in several phases.
In 2010, roughly 82,000 beneficiaries in Missouri reached the donut hole, according to HealthCare.gov, a website run by the U.S. Department of Health and Human Services. That means thousands of seniors were responsible for paying 100 percent of the prescription coverage costs after reaching Medicare Part D's $2,800 maximum allowance.
"Many of the seniors in Missouri won't ever reach the donut hole," said Kay Barbee, a counselor with the Central Missouri Area Agency on Aging. "But for those on brand-name prescriptions who take multiple medications during the month, the donut hole is a real issue."
- Seniors receiving Medicare Part D benefits have a maximum deductible of $310.
- Once beneficiaries reach their deductible, they must pay 25 percent of their prescription cost up to $2,800, with prescription plans paying 75 percent of costs.
- After seniors reach the $2,800 maximum, they must pay 100 percent of their prescription cost up to $4,550.
- Once beneficiaries reach the $4,550 limit, they pay $2.50 for generic and $6.30 for name-brand medications or 5 percent of cost, whichever is higher.
Thomas McAuliffe, health policy analyst for the Missouri Foundation for Health, said some seniors must make difficult choices when it comes to affording prescriptions.
As a result, McAuliffe said that some seniors do not take their medications as prescribed.
"A lot of seniors forgo their medications or take half their medicines because they can't afford them," McAuliffe said. "They either become sick or die."
Barbee, who works with seniors to find the best insurance plans for them and to make sure that they keep plans current, had similar concerns.
"Some seniors skimp on medications once they reach the coverage gap," Barbee said. "If seniors don't have the money to pay for their medications, they won't take them."
According to a nationwide study by John D. Piette and the American Diabetes Association, two-thirds of patients did not tell their doctors that they planned to under-use their medication because of cost and 35 percent never discussed medication costs with their doctors at all.
Additionally, the same study found that 17 percent of patients reported one or more episodes of cost-related medication under-use. The number increased to 27 percent for patients with more than one serious health issue, such as those dealing with both diabetes and depression.
On top of out-of-pocket prescription costs, seniors are responsible for paying a monthly premium. Premiums can range from anywhere from $14.30 per month to $113.30 per month in 2011, Barbee said.
The government does offer extra-help programs for those who struggle with the financial burden of the donut hole. However, because the programs are based on both income and assets, many seniors fail to qualify, Barbee said.
Closing the gap
- Starting June 2010, Medicare beneficiaries who reached the donut hole received a one-time tax-free check of $25o. According to HealthCare.gov, more than 82,000 seniors in Missouri have been issued rebate checks since the program's inception.
- Beginning Jan. 1, beneficiaries who had met their $310 deductible and entered the donut hole were eligible for a 50 percent discount on name-brand prescriptions. Beneficiaries were eligible for a 7 percent discount on generic prescriptions.
- Beginning Jan. 1, 2012, the discount on generic prescriptions will rise from 7 percent to 14 percent. The discount of name-brand prescriptions will gradually increase to 75 percent by 2020.
- By 2013, government subsidies and industry discounts will help seniors pay for brand-name prescriptions.
- By 2020, the donut hole should be effectively closed with aid from prescription discounts, industry discounts and government subsidies.
Additionally, although the beneficiary only pays a percentage of retail costs once he or she reaches the donut hole, 100 percent of the purchase price is counted towards the $4,550 maximum, allowing seniors to exit the gap sooner.
Barbee said that she believes that the discounts are beneficial to seniors taking both name-brand and generic prescriptions.
"There are some medications where generics aren't available," Barbee said. "So although 7 percent doesn't seem like much, it makes a huge difference."
Paula Kurtz, a Medicare beneficiary that works with Barbee, has seen the effects of the donut hole firsthand. While her prescription costs do not put her in the donut hole, her husband's monthly prescriptions cause him to fall into the donut hole for almost five months each year.
"My husband's medications usually put him in the donut hole usually from January to the end of the year," Kurtz said. "At least that was the case last year. We are just waiting until it happens again this year."
Kurtz said that when the new benefits kick in "it will be a huge benefit for the amount we pay for prescriptions to be cut in half. My husband's prescriptions are about $600 each month, so that's a $300 savings. ... Over the year that will save us almost $1,500."
Kurtz said the savings will help pay for extra care for her husband.
McAullife said that he sees the closing of the donut hole as a step towards improving overall health for seniors, including making beneficiaries more likely to seek care for other conditions, fill prescriptions and take prescriptions as prescribed.
"For years, seniors who have Medicare have had to deal with the sickening choice of paying for rent and food or paying for their health care needs," McAuliffe said. "We are moving past these choices to put seniors in a better position. We are making good health care coverage a right."