Every year, Missouri senior citizens pay thousands of dollars out of their own pockets to get the prescription drugs they need, because of a coverage gap in Medicare.
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However, new provisions of the health care reform law are slowly but surely chipping away at the Medicare "donut hole," which impacts about 3 million beneficiaries across the country and about 82,000 in Missouri annually.
The Medicare donut hole occurs when an individual reaches Medicare Part D’s spending limit for prescription drugs (i.e., $2,880). At that point, the individual is responsible for paying 100% of the drug costs, including the costs of the deductible and co-insurance. Coverage resumes when the beneficiary becomes eligible for Catastrophic Coverage, which picks up when the yearly out-of-pocket spending limit of $4,550 is reached.
"Prescription drug coverage relief is critical for Missouri’s senior citizens, most of whom are on fixed incomes," said Thomas McAuliffe, health policy analyst for the Missouri Foundation for Health. "The health care reform law not only closes the donut hole, but also offers other benefits like no-cost preventive care for seniors, which will help keep our 65-plus residents healthier for years to come. And that benefits everyone."
The donut hole will effectively close in 2020, and Medicare beneficiaries will see their coverage burden reduced in several phases:
In fall 2010, senior citizens who reached the donut hole were issued a one-time, tax-free $250 check to help pay for medications.
Beginning in 2011, Medicare beneficiaries will receive a 50 percent discount on brand-name drugs; that discount will gradually increase to 75 percent by 2020. Senior citizens will also start to pay less for generic Part D drugs in the donut hole.
In 2013, seniors will begin to pay less for brand-name prescription drugs through government subsidies and industry discounts. The subsidies and discounts will expand over the next several years, ultimately enough to help close the donut hole in 2020.
"Until now, rising drug costs have pushed many senior citizens to make tough decisions regarding their own personal budgets in order to afford important medications," McAuliffe said. "Closing the donut hole ensures they won’t have to decide between purchasing basic needs and filling prescriptions."