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.
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.