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July, 2007:
:: Doughnut Hole WARNING - Are You Nearing Your Coverage Gap?
:: The 2007 Doughnut Hole Calculator
:: Doughnut Hole Related Questions
:: Question About Last Months Newsletter
:: Closing Notes
Doughnut Hole WARNING - Are You Nearing Your Coverage Gap?
"My prescription costs just increased, what happened to my Medical Part D coverage?"
Are you prepared for the Medicare Part D Doughnut Hole or Coverage Gap? According to a sample of 2006 Medicare Part D beneficiary data, we expect that at least half of the Part D beneficiaries who enter the Doughnut Hole will do so in late July or early August 2007 - the Doughnut Hole is where most Part D beneficiaries will pay 100% of their prescription medication costs. As reported last month, 2007 Part D beneficiaries will enter the Doughnut Hole when the retail costs of their prescription medications reach $2,400. (Last year, the Doughnut Hole or Coverage Gap began when retail prescription costs reached $2,250.)
For those Medicare beneficiaries already in the middle of their second Medicare Part D plan year, you may recall that in 2006 the Coverage Gap or Doughnut Hole caught many Medicare Part D beneficiaries completely by surprise. Based on the questions we are already receiving this year, we see that such confusion over the Doughnut Hole will certainly be repeated in 2007.
In an analysis by the Actuarial Research Corporation for the Kaiser Family Foundation, it is estimated that over 3 Million people will enter the Doughnut Hole in 2007. In addition, even if you had Part D Doughnut Hole coverage in 2006, you may not have the same coverage this year. There are more Part D plans in 2007 than in 2006, but fewer of the 2007 Part D plans offer complete Doughnut Hole coverage. According to the Kaiser Family Foundation, the number of Medicare Part D plans in 2006 was 1,429 and in 2007 the number of Part D plans increased to 1,875. However, in 11 States there are actually no 2007 Part D plans covering both brand name and generic prescriptions in the Coverage Gap.
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How can you prepare for the 2007 Doughnut Hole?
We suggest that you first determine when (and if) you will enter the Doughnut Hole. Here are a few guidelines
- First, not every Medicare Part D beneficiary will fall into the Doughnut Hole. If you have prescription costs under $200 per month, you will never reach the Coverage Gap.
- Medicaid/Medicare or "Dual-Eligible" beneficiaries will also never fall into the Doughnut Hole.
- Part D beneficiaries who have higher prescription costs (over $200 per month) will enter the Coverage Gap or Doughnut Hole at different times based on each individual person's total retail prescription costs.
- If you have monthly retail prescription costs of over $454, you will go through the Doughnut Hole and enter into the Catastrophic Coverage portion of your Part D plan.
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What will you pay in the Doughnut Hole?
When your total retail costs for prescription medications reach $2,400 - you enter the Doughnut Hole. If your Part D Plan . . .
- covers both brand name and generic medications in the Doughnut Hole, your Part D plan will continue as usual and you will not notice any changes in prescription costs;
- provides generic drug coverage in the Doughnut Hole, you will still receive your Part D benefit for your generics and pay full price (100%) for any of your brand name medications;
- does not provide any Doughnut Hole coverage, you will pay full price (100%) for both your brand name and generic medications while in the Coverage Gap.
If you are still not sure how this all works - we have built an online Doughnut Hole Calculator that will help you understand the Coverage Gap as it applies to your own prescription expenses. Please see the next section, below.
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The 2007 Doughnut Hole Calculator
To assist you with better understanding your Part D plan, we have developed an online tool that will show you approximately when you will enter the Doughnut Hole and help you understand the possible costs of your own personal Doughnut Hole or Coverage Gap.
The Q1Medicare.com Doughnut Hole Calculator is free to use and can be found at:
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:: http://www.q1medicare.com/PartD-PartDCoverageGapCalculator07Xphp.php
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Remember, the calculator is an estimate based on the CMS Standard Plan, but should provide some guidance for your 2007 prescription budget. The Doughnut Hole Calculator allows you to
- Enter in your monthly, quarterly, semi-annual and annual prescription retail costs (before Part D coverage) - For example, if you purchase the same medications only once a month, then enter only monthly retail costs. (This monthly retail value should be available from your pharmacy or Part D plan). If you also purchase certain medication every three months, then enter these costs in the quarterly cost field. If you purchase some medications only once a year, add those values to the annual cost box.
- If your Part D plan has an initial deductible, enter this initial deductible into the form. About 40% of Medicare Part D plans have an initial deductible where you pay 100% yourself before the beginning of your Part D benefits. The standard deductible for 2007 is $265.
- Choose the month in which your Part D plan began. If you had a 2006 Medicare Part D, your 2007 Medicare Part D began in January. If you just began receiving your Part D benefits, select the starting month of your Part D plan.
- If you wish, you may also enter your monthly Part D premiums. This is an optional number that does not change your Doughnut Hole calculation, however if you enter this figure you will get a better idea of your total out of pocket prescription costs for 2007. The average monthly Part D premium for 2007 was $27.35.
- Click on the "Submit" button. Your personal information will not be shared with any third party.
- Your Doughnut Hole results are shown on the same page directly below the Doughnut Hole form. The colors show you whether you are in the initial deductible phase, the initial coverage phase, the Doughnut Hole, or the Catastrophic Coverage phase.
- Would you like a copy of your Doughnut Hole report? Enter your eMail address in the form at the bottom of the page and we will send you an eMail copy of your page. Your eMail information will not be shared with any other party.
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Still not sure? Would you like to see some examples of the Doughnut Hole Calculator in action?
We also have provided a few examples of how to operate the Doughnut Hole Calculator:
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What does the Doughnut Hole mean to you?
If you know approximately when you are going into the Doughnut Hole and how much you will spend, begin preparing now.
For some Part D beneficiaries, the Doughnut Hole will prove to have a large financial impact on personal budgets. We designed our online Doughnut Hole Calculator with the hope that it will at least show Part D beneficiaries when they should prepare to see increased prescription expenses.
Aside from adjusting your personal budget accordingly, you can explore possible generic alternatives. Try to speak with your physician(s) now and get an idea if they see any prescription changes on the horizon - check to see if these potential medications (or their generic equivalent) are also part of your new Part D plan's formulary.
Also, if you have Veterans Administration benefits (or something similar), you may wish to see if any of your medications are available from the VA.
Do you have suggestions of how other Medicare Part D beneficiaries can deal with the increased costs that come with the Doughnut Hole? Please let us know by sending us an eMail or adding your thoughts to our Blog at:
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:: http://www.q1medicare.com/Blog-PartDCommunityBlogInformYourself.php?blog_id=31
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Doughnut Hole Related Questions
Question: What happens when we buy are medications in advance? For instance, what if we buy a three-month supply of medication through mail order?
Answer: The Coverage Gap or Doughnut Hole arrives at different times for each person based on monthly retail prescription costs. If you purchase your medications on a three month basis, the Doughnut Hole will most likely arrive earlier than with monthly purchases. Quarterly purchases may also affect when you leave the Doughnut Hole. You can enter different values in the Doughnut Hole Calculator and see the different results. (For instance, enter the prescription costs of $800 dollars per month and compare the results with to when you would instead pay $2400 on a quarterly basis. In the first case, ($800 per month), you would enter the Doughnut Hole in April and come out in July. If you spend $2,400 in the first month, you would enter the Doughnut Hole in February and also come out of Doughnut Hole in July.)
Question: What would happen if I have a Part D plan where we can purchase a three month mail order prescription supply for the cost of two months?
Answer: The Doughnut Hole is based on the retail costs of your medications. So there would be no effect on your Doughnut Hole calculation because you still purchased the same retail amount of prescriptions. However, your overall out of pocket costs may be less depending on your chosen plan.
Question: How many people are expected to enter into the Doughnut Hole in 2007?
Answer: As noted above, the Actuarial Research Corporation (in an analysis for the Kaiser Family Foundation) estimated that over 3 Million people will enter the Doughnut Hole in 2007. Of these people, 2.2 million people are expected to remain in the Doughnut Hole and 1 Million people are expected to go completely through the Doughnut Hole and qualify for Catastrophic Coverage.
Question: I just entered the Coverage Gap last month. Can I just drop my current Prescription Drug plan since there are no more benefits and then sign up again for 2008? I will not reach Catastrophic Coverage phase because I have already purchased enough medications for all of 2007.
Answer: First, Medicare Part D is a voluntary program. You are permitted to cancel your Medicare Part D plan, BUT please read further. When you are without creditable Part D coverage for the remainder of 2007, you will incur the Premium Penalty (you pay an additional monthly premium based on 1% of the average monthly premium for each month that you are without Part D coverage). If you cancel Part D coverage now, you will pay at least an additional 5% premium penalty when you enroll in a new Medicare Part D plan and will continue to pay the penalty for the remainder of the time you have a Part D plan. The amount of this penalty can increase year to year based on this average premium figure (this year the average premium is $27.35). In such a situation, most people may decide to stay with their Part D plans and avoid the premium penalty. You may wish to just consider the monthly Part D premium as normal insurance (like car insurance) - insurance coverage you have in case you need it, such as for unexpected medications. More on the Premium Penalty:
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:: http://www.q1medicare.com/PartD-Penalties-Beyond-Open-Enrollment.php
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Question About Last Months Newsletter
Question: Last month your Newsletter described a standard Medicare Part D plan for 2008 and showed the changes from this year's 2007 Medicare Part D plans. How many Medicare Part D plans actually followed this CMS Standard Part D plan?
Answer: Only a small portion of the 2007 Part D plans exactly followed the CMS Standard plan. According to the Kaiser Family Foundation, of the 1,875 Part D plans in 2007, only about 12% of the Part D plans actually offered a Part D plan that mirrored the CMS Standard drug benefit. About 60% of the 2007 Part D plans offered no deductible and 86% of the 2007 Part D plans used tiered co-payment rather than a 25% co-insurance model. More details on how the standard Medicare Part D plans compare between 2008, 2007, and 2006 can be found here:
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:: http://www.q1medicare.com/PartD-The-2008-Medicare-Part-D-Outlook.php
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Closing Notes
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Last updated on: 07/05/2009
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Life Insurance plays an important role in your families financial stability.
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