November 2008
The doughnut hole
The big issue for many people is figuring out whether they are at risk for hitting the doughnut hole. The doughnut hole refers
to the way the government structures the Part D benefit. About 25 percent of plans offer gap coverage when in the doughnut
hole, but the coverage is not as generous because the government does not subsidize it.
In 2009 the doughnut hole (or coverage gap), as dictated by the government, occurs when your drug expenses (what you and the plan together spend) hit $2,700. The gap continues until you have spent $4,350 out of your own pocket. At that point, coverage starts again and will pay 95 percent of your drug expenses.
So if you take many drugs, especially expensive brand-name drugs, the coverage gap can be intimidating and should be the central issue in your choice of a Part D plan.
In 2009 about half of national insurers offering Part D plans will offer some coverage in the doughnut hole. That includes big national insurers such as Aetna, Cigna, CVS Caremark, Humana, Medco, and United Health Group.
Most plans that cover the doughnut hole pay for generic drugs, with limited or no coverage for brand-name drugs. But that generic coverage varies. Six percent of plans in 2009 will cover all generics; the majority will cover about two thirds of generics. The fact that Part D plans generally cover only generics in the doughnut hole has been viewed as a drawback, and it is one if you have to take more expensive brand-name drugs. But more generics are available these days, and many generics meet the needs of people taking chronic disease medicines.
Bottom line. If you take prescription medicines while on Part D and you went into the doughnut hole last year (about 1 in 4 did in 2007), or if you think you might fall into the hole this year, consider enrolling in a plan that has coverage in the doughnut hole. But we recommend that you weigh how far you might fall into the doughnut hole and balance your premium expense against expected drug costs.
That's because you'll pay a higher monthly premium for a plan that has coverage in the doughnut hole. The average monthly premium cost for a plan that covers some of the doughnut hole will average about $74, the Kaiser Family Foundation reports. That's compared with an average monthly premium of about $33 for a plan with no gap coverage.
So for an extra $492 or so a year in premiums, you would have some security of coverage in the gap, and possible protection from significant expenses if you take many drugs or suddenly fall ill. But if you anticipate expenses in 2009 that are only marginally into the doughnut hole, a plan that offers gap coverage might not make sense.
In 2009 the doughnut hole (or coverage gap), as dictated by the government, occurs when your drug expenses (what you and the plan together spend) hit $2,700. The gap continues until you have spent $4,350 out of your own pocket. At that point, coverage starts again and will pay 95 percent of your drug expenses.
So if you take many drugs, especially expensive brand-name drugs, the coverage gap can be intimidating and should be the central issue in your choice of a Part D plan.
In 2009 about half of national insurers offering Part D plans will offer some coverage in the doughnut hole. That includes big national insurers such as Aetna, Cigna, CVS Caremark, Humana, Medco, and United Health Group.
Most plans that cover the doughnut hole pay for generic drugs, with limited or no coverage for brand-name drugs. But that generic coverage varies. Six percent of plans in 2009 will cover all generics; the majority will cover about two thirds of generics. The fact that Part D plans generally cover only generics in the doughnut hole has been viewed as a drawback, and it is one if you have to take more expensive brand-name drugs. But more generics are available these days, and many generics meet the needs of people taking chronic disease medicines.
Bottom line. If you take prescription medicines while on Part D and you went into the doughnut hole last year (about 1 in 4 did in 2007), or if you think you might fall into the hole this year, consider enrolling in a plan that has coverage in the doughnut hole. But we recommend that you weigh how far you might fall into the doughnut hole and balance your premium expense against expected drug costs.
That's because you'll pay a higher monthly premium for a plan that has coverage in the doughnut hole. The average monthly premium cost for a plan that covers some of the doughnut hole will average about $74, the Kaiser Family Foundation reports. That's compared with an average monthly premium of about $33 for a plan with no gap coverage.
So for an extra $492 or so a year in premiums, you would have some security of coverage in the gap, and possible protection from significant expenses if you take many drugs or suddenly fall ill. But if you anticipate expenses in 2009 that are only marginally into the doughnut hole, a plan that offers gap coverage might not make sense.
