Generally speaking, Medicare Part D has more fees and direct costs associated with it than Medicare Part A or Medicare Part B. For example, you will be expected to pay a monthly premium in addition to any premium associated with Medicare Part A for the duration of your Part D coverage. Likewise, you’ll also be expected to pay a deductible, the total amount that you have to pay within a calendar year before you are able to get any Part D benefits at all. All of these features, however inconvenient, are similar to other insurance products — you are probably familiar with how they work.
The Medicare Part D feature that is most troublesome to the majority of insurance holders is known as the “coverage gap” or “donut hole.” The “donut hole” is a plain cost-saving measure — there is no way in which it benefits you as a patient who relies on Medicare insurance. In theory, the “donut hole” is a level of expense that few people will reach, and only if they need several prescriptions on a regular basis. When you reach the donut hole, you will receive a 50% discount on prescription drugs as paid for by the drug manufacturing company itself.
While you are in the Medicare Part D “donut hole,” you will not receive the full value of your prescription drug benefits. In fact, the benefits that you do receive are subsidized by the drug companies themselves. If that seems strange, well, there is one benefit to you: Even though you will only be paying 50% of your prescription medication costs, you will be “credited” for 100% of each medication’s value, meaning that you’ll escape the “donut hole” a little bit faster. You can only enter this coverage gap once a year, so once you’re out, you’re set for a year.
The Medicare Part D coverage gap is one of the most controversial and difficult parts of the coverage for most people to understand. Luckily, once you have passed the donut hole for the year, you will generally have an extremely high level of coverage — far more than you had in the charges immediately prior to the hole. Whereas costs prior to the “donut hole” usually amount to 25% out of pocket, when you surpass the donut hole you drop back to a very manageable 5% out of pocket. Although these numbers are periodically adjusted, the general structure remains the same.