Sunday, July 30, 2006
Seniors and the Donut Hole
Just as Congress recesses for some early electioneering, the much talked about but seldom understood Donut Hole is rearing its ugly head for people on Medicare drug plans. The NY Times report on its effects also has a fairly clear explanation of how the Donut Hole works.
Under the standard drug benefit defined by Congress in the 2003 Medicare law, the beneficiary pays a $250 deductible and then 25 percent of drug costs from $251 to $2,250. When total yearly drug costs, paid by the beneficiary and the plan, reach $2,250, the coverage stops, and the beneficiary pays 100 percent of the cost of each prescription, until the person’s out-of-pocket costs reach $3,600. At that point, insurance resumes, and the beneficiary pays about 5 percent of the cost of each drug. The tabulation of costs begins anew each year....Another stupid Republican trick from the people who brought us Iraq, Paris Hilton tax cuts and Guantanamo Bay.
....In fact, the coverage gap is twice as large as those numbers would suggest. The $2,250 is a measure of total drug spending. The $3,600 is a measure of out-of-pocket costs; it corresponds to about $5,100 in total drug spending. Under the standard benefit, a consumer is personally responsible for $2,850 of drug spending in the coverage gap — the amount from $2,250 to $5,100.
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