The 42% generic drug Donut Hole discount is paid by your Medicare Part D plan and does not count toward your True Out-of-Pocket costs (TrOOP) or Donut Hole exit point.
The 55% brand-name drug discount (beginning in 2013) is split into two parts:
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The first portion, is a 50% discount paid by the drug manufacturer as it has been since 2011.
- The additional 5% discount in 2016 is considered plan coverage and is paid by your 2016 Medicare Part D prescription drug plan. Since this additional 5% brand-name drug discount is paid by your plan and considered plan coverage, the 5% does not count toward getting out of the Donut Hole or meeting your TrOOP.
Here is an example of how this works: In 2016, if you buy a brand-name drug that has a retail price of $100, you will pay $45 (a 55% discount). For this Donut Hole purchase, $95 will count toward getting out of the 2016 Donut Hole (or meeting your 2016 TrOOP limit of $4,850 ) – the $45 you paid plus the $50 brand-name drug discount paid by the drug manufacturer. As noted above, the extra $5 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 2016 Donut Hole, you would pay $58 (receiving a 42% discount) and only the $58 you paid would count toward your 2016 TrOOP or Donut Hole exit point.
You can read more about the 2016 Donut Hole in our article:
"An explanation of the 2016 Medicare Part D Coverage Gap or Donut Hole."