Ask Nancy: How does that 50% doughnut hole prescription discount work?

Aug 13, 2010 3:04 PM

Question When I filled out the Medicare prescription compare plan, I miscalculated my husband's insulin prescription. Consequently, we reached the doughnut hole within five weeks. In 2011, we are told that we will be paying 50 percent less on name-brand drugs while in the doughnut hole.

Will the full price of the drugs be deducted from $4,550 that the feds require us to pay? Or, will it just be our 50 percent share, meaning we'll still end up paying $4,550 in the long run?

Answer Good news for you—it’s the former.

Here’s an explanation from our go-to experts at the Medicare Rights Center.

The 50 percent discount for brand-name drugs that will be applied beginning in 2011 will effectively shrink the $4,550 doughnut hole for you. Both what you pay out of pocket AND the 50 percent discount will count toward the $4,550.

Once you are out of the doughnut hole and reach catastrophic coverage, you will pay 5 percent of the cost of your drugs, or a copay of $2.50 for generics and $6.30 for brand-name drugs, whichever is greater.

There will also be a 7 percent discount for generics in the doughnut hole in 2011. The discount for generics, however, will NOT count toward the $4,550 threshold. Only what you pay—93 percent of the cost of the drug—will count.

The Medicare Rights Center folks sent along a handy fact sheet * giving the full timetable for the doughnut hole phaseout.

* Links to PDF

-- Nancy Metcalf, Senior Program Editor