Straddle Claim example of going from your Initial Coverage Phase into the 2012 Donut Hole

If you are using a formulary prescription drug that has a $1,894 retail cost and, since the start of 2012, you have already purchased medications with a total retail cost of $930, your purchase will push you over your Medicare Part D prescription drug plan's Initial Coverage Limit of $2,600 (that is your total retail drug purchases for 2012 will now be $2,824). So that question is, will you pay the full retail price for your medications?

No. Your present $1,894 drug purchase is calculated as a Straddle Claim and should cost you around $680.20.

In your situation, you will pay your initial co-payment (or cost sharing) for the $1,894 drug plus the difference of the retail amount that takes you into your Medicare Part D plan's Donut Hole or Coverage Gap - less any applicable Donut Hole Discount applied to the balance of the purchase that falls into the Donut Hole.

So, a prescription drug purchase that would exceed your Medicare prescription drug plan's $2,600 Initial Coverage Limit and then crosses into the Coverage Gap or Donut Hole portion of your Medicare Part D plan is known as a "straddle claim" because it will cross to different phases of your Medicare Part D coverage.

Here is how we can estimate your straddle claim cost at the pharmacy:

Current Amount in Initial Coverage Phase: $930
You Plan's Initial Coverage Limit: $2,600
What you have remaining before reaching the Donut Hole or Coverage Gap Phase: $1,670
Your Drug Purchase of: $1,894
Your Medicare Part D plan's Cost-Sharing Amount for this purchase (30% of the retail cost as co-insurance): $568.20

In this example, the first $1,670 of your $1,894.70 drug purchase will still be in your Initial Coverage Phase and you will be charged only your normal Medicare Part D plan co-payment (30%) for the first $1,670 portion of the purchase - or $568.20.

The second portion of your purchase, the remaining $224, falls into the Coverage Gap or Donut Hole and you will receive a 50% discount (in 2012) on this part of the purchase (or $112), assuming the purchase is for a name-brand medication.

So - your entire purchase would then cost you around: the co-insurance of $568.20 + the discounted remainder of $112 = $680.20.

Please note that, since this purchase was for a name-brand medication, you would get full credit for the $224 Donut Hole portion of the purchase toward exiting the Donut Hole (or your TrOOP limit ($4,700 in 2012).

Anytime you figure a Straddle Claim, please realize that the total is only an estimate as retail drug prices can fluctuate throughout your Medicare plan year.

Finally, no matter how you calculate a Straddle Claim, you will never pay more than the retail price for your medications and your monthly Explanation of Benefits letter that you are sent by your Medicare Part D plan will show you how the purchase was allocated within the phases of your plan.

Click here if you wish to see the other Medicare Part D plan standard defined plan parameters for 2012 on this site

Click here if you wish to see how the Donut Hole Discount changes until 2020 on this site