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So you’ve finally signed up for the new Medicare drug program.  Congratulations!  This means that you have successfully navigated through the maze of private insurance plans and chosen the one that is right for you – and if you have done so correctly, you may actually end up saving money on your new plan in the long run.   So now you can breathe a sigh of relief, right?  Well, not so fast.  Enrolling in Medicare Part D is the first step, but if you are not careful, you may end up falling into a trap known as the ‘donut hole’ in your coverage plan.

What exactly is the ‘donut hole?’  Quite simply, it is a gap in prescription coverage.  Plans are required by law to provide standard prescription drug coverage.  Under Medicare Part D plans, an insurance company will cover 75% of an enrollee’s drug costs (excluding monthly premium and deductible) from $251 up to $2,250 annually. The beneficiary is responsible for 25% of the costs.  If the individual’s expenses go above that threshold, then he/she might have to pay 100 percent of the drug costs.  A provision known as ‘catastrophic coverage’ kicks in once those costs go beyond $5,100.  At that point, Medicare will pay 95 percent of your drug costs and the beneficiary contributes 5%.  So, you could be held responsible for as much as $3,600 – that’s the difference between $5100 and $2250, plus the $750 out-of-pocket expenses you pay on covered drugs, which include the annual deductible and 25% mentioned above.

For consumers who are low-income, or on a fixed income, this gap in coverage may pose a challenge unless they are eligible for “Extra Help” or qualify for other prescription drug coverage. So, to avoid unanticipated out-of-pocket costs here are a few tips:

1. Pay close attention to the prices you pay for your medication.  Keep in mind that some pharmacies charge more than others for the same drug, so be sure to shop around for the best prices.

2. Though some Medicare prescription drug plans claim [are required by law] to keep track of enrollees’ expenses, you should not rely on this.  Keep careful track of all the money that you spend so you can anticipate when you are close to the $2,250 threshold.  Please keep in mind that certain expenses do not count towards your total expenses, including what you spend on medications that are not covered under your plan, or medications imported from other countries.

3. Speak to your prescribing physician about your medications to be sure that he is prescribing the most cost-effective alternatives available. 

4. Keep in mind that Medicare prescription drug plans have the right to change their list of covered drugs as long as they give plan participants 60 days notice.  If you chose a plan because it covered a certain medication and that medication is removed from their approved list, you have the right to request a decision called a coverage determination by your plan.