Medicare Part D Comes with Ugly Surprise

Med Headlines - Doughnuts are great with coffee but the ”doughnut hole” that comes as part of the package seniors get with the Medicare Part D prescription coverage plans can be a very costly surprise.

By this time of the year, many seniors leave the pharmacy surprised over the unexpected expense of prescription costs now versus what they’ve been paying earlier in the year.

Medicare Part D is based on three stages of coverage that are determined by total costs accrued over the year. Enrollees to the plan are required to pay a deductible and make a co-payment when purchasing prescriptions.

Some enrollees, getting their coverage from private insurers, also pay a monthly premium.

During the first stage of the plan, the enrollee pays 25% of the cost of prescription drugs until a limit of $2,400 of total out-of-pocket expenses has been reached. If the limit is reached before the end of the coverage year, the senior reaches the doughnut hole stage of coverage.

In this second stage of coverage, the senior must pay 100% of all prescription costs until yet another level of expenditure has been reached. If this second limit is reached before year end, the senior is eligible for catastrophic coverage.

During the third, catastrophic coverage, stage of coverage, Medicare resumes financial assistance by covering 95% of the expense of prescription drugs until the end of the year.

The dollar amount a senior must consume during the doughnut hole phase is $3,850 for 2007. This means the senior gets no assistance whatsoever from Medicaid until this amount has been paid out of pocket by the seniors themselves.

The middle stage of coverage, where there is no financial assistance for prescription drugs, can come as a shocking surprise at the pharmacy. Seniors report going from a co-pay of $50 to $600 in personal expense when refills are due.

Filed under: Medicare