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The Donut Hole Discount for Generic Drugs Increases in 2014

Published on 2013-08-19 14:31:59Category: Donut Hole Discount

The 2014 Donut Hole discount will remain at 52.5% for all brand-name medications purchased in the Donut Hole (you pay 47.5% of the retail cost and get 97.5% credit toward TrOOP) and the 2014 generic Donut Hole discount will increase to 28% (you pay 72% of the retail cost).

Popular Question:  So who is paying the Donut Hole discount and does the discount count toward getting out of the Coverage Gap?

The generic drug Donut Hole discount is paid by your Medicare Part D plan and does not count toward TrOOP (getting out of the Donut Hole).  The brand-name drug discount is split into two parts (this began in 2013).

The first portion, is a 50% discount paid by the drug manufacturer as it has been since 2011.  The additional 2.5% discount is considered plan coverage and is paid by your Medicare Part D plan.

Since both the generic discount and this additional 2.5% brand-name drug discount are paid by your plan and considered plan coverage, they do not count toward getting out of the Donut Hole or meeting your True Out-of-Pocket costs (TrOOP).

Therefore, as is true in 2013, 50% of the brand-name discount – that portion paid by the manufacturer, will continue to count toward your TrOOP along with the 47.5% that you paid. Here is an example of how this works:  In 2014, if you buy a brand-name drug that has a retail price of $100, you will pay $47.50 (a 52.5% discount).  For this Donut Hole purchase, $97.50 will count toward getting out of the Donut Hole (or meeting your 2014 TrOOP limit of $4,550 ) – the $47.50 you paid plus the $50 brand-name drug discount paid by the drug manufacturer.

The extra $2.50 portion of the discount will not count toward TrOOP because it was paid by your Medicare Part D plan and is considered plan coverage. 

However, if you purchased a $100 generic medication while in the 2014 Donut Hole, you would pay $72 (28% discount) and only the $72 you paid would count toward your TrOOP or Donut Hole exit point.

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