New enrollees of Medicare drug plans may be stunned this summer or early fall when their new coverage suddenly stops - they've hit the "doughnut hole," or gap in coverage.  A Commonwealth Fund study found that 38% of Medicare beneficiaries are at risk of hitting the doughnut hole.  That means 7 to 10 million seniors and the disabled could be paying 100% of the costs of their prescriptions for part of the year.

Under Part D, once initial drug spending reaches $2,250 (based on the retail drug costs, not co-pays), then coverage stops and beneficiaries must pay 100% of the next $2,850 in drug costs before drug plans kick back in, picking up 95% of any additional costs.  Altogether, beneficiaries must pay a total of $3,600 out-of-pocket.

It's not easy for anyone to keep track of these costs.  The only time enrollees pay full retail prior to reaching the doughnut hole is the period when they are satisfying their $250 plan deductible, if their plan has one.  Many beneficiaries opted for plans with no deductible.  The drug plans are required to keep track of these costs.

Policy analysts say many beneficiaries could slide into the hole this summer or late fall - just prior to the November elections.  Some seniors with high drug costs may have hit their doughnut hole already.  This could mean a lot of angry senior voters come Election Day.

Seniors unprepared for the doughnut hole may be considering other means to save on prescriptions like importing prescriptions from Canada, or using prescription discount cards.  Neither, however, can be counted toward the $3,600 out-of-pocket costs.

TSCL believes this places an unacceptably high cost burden on seniors and the disabled.  Beneficiaries should be allowed to legally import safe, FDA - approved prescription drugs from Canada and other nations where costs are far lower than in the U.S.  The government should allow beneficiaries to count the costs toward satisfying the "doughnut hole," or maximum out-of-pocket costs in Part D coverage.  Doing so could cut costs not only for beneficiaries, but for taxpayers as well.  TSCL supports Pharmaceutical Market Access legislation (H.R. 328) introduced by Representative Gil Gutknecht (MN) and (S.334) introduced by Senator Byron Dorgan (ND).

Sign our Petition to Congress to Support Market Access to Prescription Drugs

To learn what you can do if you hit the Part D doughnut hole, click here:
"What To Do If You Drop Into The Part D Doughnut Hole."

Sources: 
"Riding the Rollercoaster:  The Ups and Downs in Out-of-Pocket Spending Under the Standard Medicare Benefit," Stuart, Briesacher, and Shea, Health Affairs, July/August 2005.

June 2006