What is the Medicare Part D Coverage Gap

The Part D Coverage Gap used to be known as the "Doughnut Hole".  The Coverage Gap relates to a gap in the Medicare Part D coverage.  The gap in coverage affects many seniors that take several name brand drugs or many drugs that carry a high price tag.  Seniors with a Medicare drug plan start the year with coverage for their drugs.  If their drug costs reach a certain point they go into the gap where they have lower coverage for their drugs.  After they have spent a large amount of money they come out of the gap and have what is considered catastrophic coverage. 

The numbers for the gap for 2011 are as follows:  Coverage Gap begins at $2,840 and goes until $4,550
During the gap you must pay 50% of name brand drugs and 93% of generic drugs.  You pay around $2 - $6 for drugs once you are in catastrophic coverage.

NOTE:  The plan costs and your costs for the drugs count toward getting you into the gap.  Only your costs for drugs count toward getting you out of the gap!  This makes it harder for seniors to get out of the coverage gap.  There are several things that I recommend to my clients to help them avoid the Coverage Gap, or lower their costs during the coverage gap.  Please see my article on Avoiding the Medicare Part D Coverage Gap for these great tips!

What is Medicare Part D

Of the four parts of Medicare, Part D is then newest and the most complex.  I still get asked what is Medicare Part D which means that the government is failing to do a proper job of educating seniors on this very important and vital part of Medicare.  Medicare Part D covers prescription drugs that are typically filled at your local pharmacy or filled through mail order.  The typical Part D drug plan consists of four Tiers generally referred to as Tier 1, Tier 2, Tier 3, and Tier 4.  Tier 1 is for generic drugs, Tier 2 is for Preferred Brand, Tier 3 is for Non-Preferred Brand, and Tier 4 is for Specialty drugs.

Medicare Part D is administered through private insurance companies such as Humana, Wellcare, BCBS, AARP United Healthcare, and many others.  They are county specific, and their costs vary greatly from plan to plan and from region to region.  Also take note of whether or not the plan has a deductible.  Deductibles are common in Part D plans.  The important considerations when determining the best drug plan for you is to consider the costs, formulary, and your pharmacy choice.  A formulary is a list of drugs that is covered by the plan as well as their level of coverage or Tier.

NOTE:  Not all formularies are created equal!  Many times you will find your drug on one formulary and not on another.  Also, it is not unusual to find your drug on different Tiers on different formularies.

Finally, to complicate things even more they throw in the coverage gap, enrollment periods, and a penalty.  Please see my article on the Medicare Part D coverage gap, enrollment periods, and penalty for more detail on those subjects.

In summary, you will pay a monthly premium for Part D of Medicare which will be determined by which plan you select.  You need to check the plan's formulary against the drugs you are taking to determine whether your drug is covered and how well it is covered.   A great resource to accomplish this is online at www.medicare.gov