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2021 Part D Rx Donut Hole – Cost Sharing

connelly law donut hole

graphic from

The Coverage gap or Donut Hole (see graphic) in Medicare prescription drug coverage  is when you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the “donut hole”) starts when you and your plan have paid a set dollar amount for prescription drugs during that year.  Your Guide to Rx Coverage #11109.    The “standard – benchmark” – companies must meet this minimum, they can offer richer Part D Rx coverage is shown in the two Graphics below, it’s also explained in Your Guide to Rx Coverage #11109.

In 2021, you’ll pay no more than 25% for covered brand-name and generic drugs during the gap—the same percentage you pay from the time you meet the deductible (if your plan has one) until you reach the out-of-pocket spending limit Publication 11493 *   Thus, the donut hole is dead!  Forbes * Medicare.Gov *    

CMS has released the following 2021 parameters for the defined benchmark standard Medicare Part D prescription drug benefit:

  • Deductible: $445 (a $10 increase from 2020);
  • Initial coverage limit: $4,130 (a $110 increase from 2020);
  • Out-of-pocket threshold: $6,550 (a $200 increase from 2020);
  • Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program: $9,313.75 (a $275 increase from 2020);
  • Estimated total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are eligible for the coverage gap discount program: $10,048.39 (a $329.01 increase from 2020); and
  • Minimum cost-sharing under the catastrophic coverage portion of the benefit: $3.70 for generic/preferred multi-source drugs (a $.10 increase from 2020), and $9.20 for all other drugs (a $.25 increase from 2020). Thompson-Reuters *

2020 Explanation from Official Medicare Publication #11109

rx donut hole

Explanation from

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The “Total Yearly Cost of Care” does not provide personalized or transparent information. For example, when a consumer inputs or changes personal data, such as drug information, his or her total estimated costs do not change. This is not mathematically possible based on the plan benefits. Additionally, the tool does not share what is included in the total cost. As a result consumers will likely see the total cost and assume they are receiving a personalized and tailored estimate which may not be accurate.

The estimated total yearly cost of care is flawed. On a plan that has reduced benefits year over year, the expectation would be that the “estimated total yearly costs” would increase. However the tool is inaccurately estimating the consumer’s costs will decrease. It doesn’t make mathematical sense. For consumers on a fixed income and cost conscious, this could be detrimental to their situation.

Most supplemental benefits are not included in the total yearly cost of care. Over the past several years supplemental benefits have expanded and provided members with options that not only treat, but prevent illness and increase quality of life. We know the high value of benefits such as vision, dental and hearing to our consumers, and they are a key way we are partners in care with our members. Some of the benefits that are not included are:

Transportation lists copay but not number of rides.

Eyeglasses list copay but does not share if benefit covers frames, lenses or contacts.

Wellness Programs include a long list of possible items including fitness, nurse hotline, Personal Emergency Response and telehealth, that can’t be lumped into a single “covered” or “not covered” benefit.  Excerpt from UHC Agent Memo  * Forbes GAO 7.2019 Report

19 comments on “Donut Hole – Coverage Gap

    • Specialty tier drugs—defined by Medicare as drugs that cost more than $670 per month in 2019—are a particular concern for Part D enrollees in this context. Part D plans are allowed to charge between 25 percent and 33 percent coinsurance for specialty tier drugs before enrollees reach the coverage gap, where they pay 25 percent for all brands, followed by 5 percent coinsurance when total out-of-pocket spending exceeds an annual threshold ($5,100 in 2019). While specialty tier drugs are taken by a relatively small share of enrollees, spending on these drugs has increased over time and now accounts for over 20 percent of total Part D spending, up from about 6 to 7 percent before 2010.

      Medicare Part D enrollees not receiving low-income subsidies can expect to pay thousands of dollars out of pocket for a single specialty tier drug in 2019 (Figure 1). Median annual out-of-pocket costs in 2019 for 28 of the 30 studied specialty tier drugs range from $2,622 for Zepatier (for hepatitis C) to $16,551 for Idhifa (for leukemia), based on a full year of use; two of the 30 drugs are not covered by any plan in our analysis in 2019.

      With the now-complete closure of the Part D coverage gap for brand-name drugs, enrollees can expect to face lower annual out-of-pocket costs for selected specialty tier drugs below the catastrophic threshold in 2019 compared to 2016, but higher costs above—driven by an increase in underlying total costs between 2016 and 2019. For example, for Humira, for rheumatoid arthritis, median out-of-pocket costs below the catastrophic threshold decreased by $99 between 2016 and 2019 (from $3,155 to $3,057), while costs above the catastrophic threshold increased by $705 over these years (from $1,709 to $2,414)—and in total, expected annual out-of-pocket costs for Humira are $606 (12%) higher in 2019 than in 2016. high drug cost chart

  1. Hi Steve,

    I’m new to Medicare and take several Rx for pain, asthma and a few other conditions. I heard that Part D makes one wait 6 months to a year to get coverage for the medications to cover a pre-existing condition. So, why should I bother getting coverage?

    ***Check our new page on Pre X and Prescriptions.

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