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Mind the Gap: How to Fill the Medicare Donut Hole

Mind the Gap: How to Fill the Medicare Donut Hole

Written by:
Eric Sabo –

Published on: October 18, 2005
Mind the Gap: How to Fill the Medicare Donut Hole

Written by:
Eric Sabo –

Published on: October 18, 2005
As seniors begin to sort through the hundreds of private insurance plans now offered for Medicare, there is one number that stands out from the fine print: ,600. This is the surprise medical bill that could greet many enrollees, unless they are careful to choose the right plan.

Set to take affect next year, the latest government benefits are far more generous in paying for needed medications. Yet the new Medicare rules can also saddle older Americans with rather hefty co-payments, which is why some insurance companies may be better than others when out-of-pocket costs are a concern, experts say.

“For someone who is not counting on ,600 in expenses, it’s a big deal,” says Deane Beebe of the Medicare Rights Center, an advocacy group in New York.

Seniors can scrutinize the various insurance offerings on the government Web site, www.medicare.gov. A new search tool that will allow people to comparison shop has just been unveiled. Although the deadline for choosing a prescription drug plan is not until May 15th, 2006, you need to decide between November 15th and December 31st to get the new Medicare coverage by the first of the year.

In considering the different policies, experts suggest that you check whether your new insurance covers the amount that government will not. The initial out-of-pocket expense is relatively painless. Medicare does not fund the first 0 spent on prescription drugs, but some insurance companies will pay for these costs, while charging only slightly higher monthly premiums.

The Big Expense
Far harder to get around is the big chunk of cash needed in the middle. This gap in coverage, nicknamed the donut hole, kicks in if you run through more than ,250 worth of prescription drugs in a year. Once your medication needs reach ,100 and above, Medicare starts to pick up 95 percent of the tab.

In between, it’s up to you or your insurance company to pay for this ,100 donut hole. The hardest hit will be patients with chronic diseases who rely on expensive new treatments. But as drug prices continue to rise, Beebe says that it will not take much for others to rack up such a tab.

“The donut hole is only going to get bigger,” she says.

A study by the Commonwealth Fund found that 38 percent of Medicare enrollees are likely to experience this costly interruption in care. Moreover, the benefits must be renewed each year, meaning that the coverage gap repeats itself if you reach the donut hole again. Over the next three years, researchers estimate that the average Medicare recipient will be paying about 44 percent of all drug costs out of their own pocket.

“Even while they’re in this donut hole, they will still be paying monthly premiums for insurance,” adds Beebe.

Hard Choices
Various companies offer coverage to make up for this gap, often for an extra cost. The average monthly premium is a month, but some of the plans that pay for drugs during the donut hole charge several times as much. In some states, the extra coverage is not an option.

For local plans that do cover the donut hole, Beebe says that it’s important to check if these plans cover the treatments you need during the gap. Some only cover generic drugs, which will not help for conditions where a specific therapy is needed. And for those who want to go to Canada for cheaper drugs, beware: buying treatments from a foreign country will not count toward the ,100 needed to reach additional Medicare coverage.

The government has announced that they will offer financial assistance to make up for this gap in those who fall below a certain income. “Everyone in Medicare, no matter what their income or how they get their health care, can chose coverage that reflects what they want,” said Mark McClellan of the Centers for Medicare & Medicaid Services.

But Beebe worries that many seniors will have to make more difficult choices than finding the right insurance company. For those who are ill and likely to need the most prescription drug coverage, the Commonwealth study suggested that high spenders will have to pay as much as two-thirds of their own drug costs. As concerns about the budget deficit grow, Beebe says that people who can barely pay for treatment now face an uncertain future.

“For those on a low income, the choice will be between food and medicine,” says Beebe.

SOURCE:- 2006 Healthology, Inc.

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