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Medicare Donut Hole to Close Further in 2011
The Medicare Donut Hole is an insurance coverage gap that occurred when the Medicare prescription drug benefit ran out and the individual paid for all drugs bought for the rest of the year. This was only applicable to Medicare beneficiaries who elected Medicare Part D prescription drug coverage.
Affordable Care Act
On March 23, 2010 President Obama passed the Inexpensive Care Act, commonly referred to as the health care reform law. Prior to the passage of the Inexpensive Care Act in March 2010, Medicare beneficiaries paid up to 25 percent of their drug costs in addition to a $310 deductible until the amount reached $2830 for the year, and then fell into the donut hole. Enrollees paid all costs out of pocket when they entered the coverage gap.
The Inexpensive Care Act has reduced the drug costs for Medicare beneficiaries and started to close the Medicare donut hole. The first step was issuing $250 rebate checks to people who fell into the donut hole in 2010. More than 1.2 million Medicare beneficiaries received rebate checks.
The donut hole is expected to close further in 2011 with Medicare beneficiaries receiving a 50 percent discount on covered brand study drugs while in the donut hole, and paying lesser for generic drugs. For 2011, when the drug costs reach $2840, the donut hole will start and end when the costs total $4550. While the Part D benefit will start in 2013, drug manufacturers will wage 50 percent brand drug discount to most Part D enrollees. With the new agreements in place, Medicare enrollees will continue saving even after the donut hole is phased out and shut absolutely by 2020.
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