Powered by Q1Group LLC
Education and Decision Support Tools for the Medicare Community

How much money could I possibly save with the 2016 Donut Hole Discount?

Category: The Donut Hole or Coverage Gap
Published: Sep, 13 2015 08:09:45

About $2,167.07 - maybe even a little more depending on your Medicare Part D plan.

Your actual savings in the 2016 Donut Hole will depend on several things including:

(1) How much you spent personally before reaching the Donut Hole and

(2) How much you spend on generic drugs vs. brand-name medications while in the 2016 Donut Hole (remember that while you are in the 2016 Donut Hole, you will receive a 42% discount on generic drugs and continue to receive a 55% discount on name-brand drugs.  Keep in mind that you only get credit for 95% of the brand-name drug purchase costs toward meeting your 2016 out-of-pocket threshold limit (or TrOOP) of $4,850.  The 95% includes the 50% discount paid by the brand-name drug manufacturer and the 45% paid by you.  The 5% discount paid by your Medicare Part D plan does not count toward TrOOP.
Here is an example, assuming:

(1) that your Medicare Part D plan has the standard $360 Initial Deductible,

(2) your plan has a standard 25% co-insurance cost-sharing structure (this means that you pay 25% of the cost of a medication and the plan pays the other 75%),

(3) you purchase only brand-name medications while in the Donut Hole, and

(4) you spend your way through your entire Coverage Gap or Donut Hole by meeting the $4,850 out-of-pocket threshold or TrOOP.
The amount that you could save would be about $2,167.07 (or 55% of $3,940.13).
Here are our calculations and a few more assumptions:
  • Your 2016 Medicare Part D Initial Deductible: $360.
  • The standard 2016 Initial Coverage Limit: $3,310 (or the total retail drug cost).
  • You have a 25% cost-sharing - so, of the $3,310, you pay $737.50 during the Initial Coverage phase (.25 x ($3,310 - $360)) .
  • The remaining balance you need to reach the 2016 Donut Hole exit point or TrOOP threshold of $4,850 is $3,752.50 ($4,850 - $737.50 - $360).
  • If you purchase $3,752.50 in brand-name drugs while in the Donut Hole you get the 55% Donut Hole discount on your purchases, so you pay $1,688.63 (.45 x $3,752.50) -- but you only get credit for $3,564.88 toward meeting the $4,850 TrOOP threshold or Donut Hole exit point (not the full $3,752.50).  Since you only get credit for 95% of your brand-name prescription purchases while in the Donut Hole, you calculate your new Donut Hole exit point by dividing the coverage gap spending amount ($3,752.50) by .95 for a total of $3,564.88. Or you can look at it as -- you actually have to buy $187.63 more in medications to meet TrOOP in order to account for the discount paid by your plan (because you do not get credit toward TrOOP for the amount paid by your plan). Your estimated savings is then $2,167.07 or ($3,752.50 + $187.63 = $3940.13) x 55%.

If you had a Medicare Part D $0 Initial Deductible, your savings would be $2,322.99 or $155.93 more in savings as compared to a Medicare Part D plan with the standard $320 Initial Deductible.

    Please note:  If you select a 2016 Medicare Part D plan that has an average cost-sharing structure of lower than 25% (you pay less than $25 for a $100 drug purchase), you will save even more money with the 2016 Donut Hole discount when you reach the Donut Hole or Coverage Gap, because you will have more of your total out-of-pocket costs falling into the 2016 Donut Hole where you get the 55% name-brand Donut Hole discount.

    For more information, you can click here to see how the Donut Hole discount increases over the next few years until the discount reaches 75% and the Donut Hole is considered “closed”.

    See our FAQ for examples of the maximum Donut Hole Discount savings for other plan years.

    Our 2016 PDP-Planner (or Donut Hole Calculator) is available to illustrate your monthly estimated costs for 2016. Several examples are available to help you get started.  Click here for an example of a Medicare beneficiary with relatively high monthly prescription drug costs (a retail drug cost of $800 per month). 
    You can also click on the following link to learn more about the 2016 Medicare Part D drug coverage.

    Tips & Disclaimers
    • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
    • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
    • Medicare has neither reviewed nor endorsed the information on our site.
    • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
    • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
    • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDP-Compare.com and MA-Compare.com provide highlights of annual plan benefit changes.
    • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
    • Limitations, copayments, and restrictions may apply.
    • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
      Statement required by Medicare:
      "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
    • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
    • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
    • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
    • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
    • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
    • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
    • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
    • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
    • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
    • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
    • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
    • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
    • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
    • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
    • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.