Your prescription drugs will never be free under Medicare Part D. The “closed” donut hole under Obamacare does not create a new coverage period under Part D during which your co-pays and co-insurance, not to mention deductibles and premiums, disappear. That’s not a reason to complain. We should shoulder costs for our healthcare, including medication, as long as they are affordable (after all, Obamacare is actually called the Affordable Care Act). So how does Obamacare strive to help you afford your prescription drugs if you’re on Medicare? First, a little history…
In the beginning, Medicare did not offer a prescription drug benefit and tens of millions of seniors paid for their medications entirely out-of-pocket. Let there be light: In 2003, Congress passed the Medicare Modernization Act, which was then signed into law by President Bush. That law gave birth to Part D – a prescription drug benefit available to Medicare enrollees. But there were holes! When Medicare Part D plans first launched in 2006, average monthly premiums were $25.93. After paying a standard deductible of $250, enrollees paid 25% of their drug costs until total drug costs (between the enrollee and insurer) reached $2,250. That’s $250 towards the deductible, $500 in cost-sharing, plus premiums of $311.16 for a total of $1,061.16 per year in out-of-pocket spending. That’s if you stayed out of the donut hole!
Enter the dark days of the “donut hole,” which, in 2006, meant 100% out-of-pocket spending between $2,250 and $5,100 – Ouch! Above $5,100 – an amount called, for good reason, “catastrophic costs” –enrollees only paid 5% of their drug costs. Part D maintained these basic components, except with rising costs in the form of higher premiums and deductibles, and a larger “donut hole,” until the passage of the Patient Protection and Affordable Care Act in 2010 – enter Obamacare (hope and change?).
By 2010, Part D plan costs increased substantially. The standard deductible was up to $310 and the donut hole expanded to payments between $2,850 and $6,460 – a hole of $3,610. But things began to change. That year, under Obamacare, enrollees who entered the donut hole received rebate checks for up to $250 towards their drug costs. Yes! In 2011, drug plans and the government started picking up 50% of the donut hole tab on brand name drugs and 7% on generic drugs. In 2013, discounts on brands rose to 52.5%, and to 21% on generics; these discounts will be the same next year. But things get even better…
By 2020 you’ll only pay 25% of your prescription drug costs after your deductible – all the way until you reach catastrophic costs when you’ll only pay 5%! Since the days are gone when Medicare’s “donut hole” forced enrollees to pay 100% of their drug costs, and cost-sharing will no longer increase above 25%, the government lays claim to having “closed the coverage gap”. While we can all shout a big amen to that, Medicare enrollees will still incur significant drug costs and sometimes they will be very high. So here’s the bad news…
Part D plans often do not cover the medications you are prescribed and need. We’ve read about this many times in reviews on MedicareDrugPlans.com. Here’s an example:
MDP Member: dnhstone Date Rated: 11/18/2013 4:40:51 PM
STAY AWAY FROM THIS DRUG PLAN!!! There are a lot of drugs not covered as Tier 1 drugs – too many inexpensive generic drugs are listed as Tier 2. Also, there are a lot of drugs that are not covered. You or your doctor need to explain need for certain drugs before they’ll approve payment.”
When your plan does not cover your meds and has refused your doctor’s request for an exception, you must either accept a lower cost pharmaceutical substitute that your doctor prescribes or pay full price for the originally prescribed medication. The full drug cost may seem painfully high but it will at least get you closer to the catastrophic level, above which you only pay 5% of drug costs. Unfortunately, that 5% only applies to covered medications – and here’s where the bad news gets worse. Government projections show that by 2020 the out-of-pocket catastrophic cost point will be $6,000! That means you will have to spend $6,000 before the government kicks in for 95% of your costs. Millions of American seniors will still be paying many thousands of dollars out-of-pocket on drug bills.
The final piece of bad news is that American drug prices are rapidly increasing year after year. An AARP report found that drug prices increased by 26% from 2005 to 2009. Some popular brand name drugs’ prices have even doubled over the past eight years. Thus, paying 25% for name brand drugs in 2020 may be well out of reach for many Americans.
Earlier analysis on PharmacyCheckerBlog demonstrated that international online pharmacies can help save Americans who are falling through the cracks under Obamacare. The same holds true for Medicare enrollees. We should not tolerate people skipping their medication because of prices, but sadly tens of millions do each year. When your plan doesn’t cover a brand name drug and there is no suitable alternative, then an international online pharmacy could help you afford medication, and save your health or even your life.
Even when your plan does cover a medication, the cost-sharing for that drug may be exceedingly high, which also makes the international pharmacy option very attractive. However, keep in mind that in the absence of regulatory changes, purchasing medication internationally (such as from a Canadian online pharmacy), will not count towards reaching catastrophic coverage. So, if you’re on several medications, some of which are covered perfectly well by your plan, then you may want to pay the higher U.S. pharmacy price until you make it into catastrophic territory. Then you can use an international pharmacy for drugs that are not covered.
The prescription access road ahead is windy but appears to be more affordable than in the dark ages before Medicare Part D and Obamacare. Over time, things will get better for many people using Part D plans but many problems will remain. Astute consumers will plan wisely each year by picking the right plans and comparing drug prices to maximize savings and ensure they are getting the medications they need to stay healthy.donut hole, Medicare Part D, Obamacare