How much money could I possibly save with the 2013 Donut Hole Discount?

Around $2,026.63 - maybe even a little more depending on your Medicare Part D plan.

Your actual savings in the 2013 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 or brand-name medications while in the 2013 Donut Hole (remember that while you are in the 2013 Donut Hole, you will receive a 21% discount on generic drugs and a 52.5% discount on name-brand drugs - but, you will receive 97.5% credit for the brand-name drug purchases toward meeting your 2013 out-of-pocket threshold limit (or TrOOP) of $4,750. The 97.5% includes the 50% discount paid by the brand-name drug manufacturer and the 47.5% paid by you. The 2.5% discount paid by your Medicare Part D plan does not count toward TrOOP.

Let's assume:

(1) that your Medicare Part D plan has the standard $325 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 are purchasing 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 $4,750 out-of-pocket or TrOOP threshold.

The amount that you could save would be around $2,026.63 (or 52.5% of $3,860.26).

Here are our calculations and assumptions:

Your 2013 Medicare Part D Initial Deductible: $325.
The standard 2013 Initial Coverage Limit: $2,970 (or the total retail drug cost).
You have a 25% cost-sharing - so, of the $2,970, you pay $661.25 (.25 x ($2,970 - $325) ) during the Initial Coverage phase.
The remaining balance you need to reach the 2013 Donut Hole exit point or TrOOP threshold of $4,750 is ($4,750 - $661.25 - $325) = $3,763.75.
If you only purchase $3,763.75 in brand-name drugs while in the Donut Hole you get the 52.5% Donut Hole discount on your purchases, so you pay $1,787.78 (.475 x $3,763.75) -- but you only get credit for $3,669.66 toward meeting the $4,700 TrOOP threshold or Donut Hole exit point. Since you only get credit for 97.5% 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 ($3,763.75) by.975 for a total of $3,860.26. Or you can look at it as you actually have to buy $96.51 more in medications to meet TrOOP to account for the discount paid by your plan -- for which you do not get credit. Your estimated savings is then $2,026.63 or ($3,763.75 + $96.51 = $3,860.26) x 52.5%.

If you had a Medicare Part D $0 Initial Deductible, your savings would be $2,157.88 or $131.25 more savings as compared to a Medicare Part D plan with the standard $325 Initial Deductible.

Examples of 2013 Medicare Part D plans that have a $325 Initial Deductible and a standard 25% Co-insurance rate: EnvisionRxPlus Silver in all states (example: S7694-01 in ME and NH), HealthSpring Prescription Drug Plan in all states (example: S5932-001 in AL and TN). You can find these plans and view plan details with our 2013 PDP-Finder on this site.

Please note: If your 2013 Medicare Part D plan has an average cost-sharing structure of lower than 25% (you pay less than $25 for a $100 drug purchase), then you will save even more money with the 2013 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 2013 Donut Hole where you get the 52.5% 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 2013 PDP-Planner (or Donut Hole Calculator) is available to illustrate your monthly estimated costs for 2013. 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).