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How much money could I possibly save with the 2017 Donut Hole Discount?


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How much money could I possibly save with the 2017 Donut Hole Discount?
Published on 2016-08-01 08:44:53
Category: Donut Hole Discounts


About $2,458 - maybe even a little more depending on your Medicare Part D plan.

However, your actual savings in the 2017 Donut Hole will depend on several things including:

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

(2)  How much you spend on generic drugs vs. brand-name medications while in the 2017 Donut Hole
(remember that while you are in the 2017 Donut Hole, you will receive a 49% discount on generic drugs and receive a 60% discount on name-brand drugs.  Keep in mind that you only get credit for 90% of the brand-name drug purchase costs toward meeting your 2017 out-of-pocket threshold limit (or TrOOP) of $4,950.  The 90% includes the 50% discount paid by the brand-name drug manufacturer and the 40% paid by you.  The 10% discount paid by your Medicare Part D plan does not count toward TrOOP.
 
Here is an example showing how to calculate your savings.  We are also assuming:

(1) your Medicare Part D plan has the standard $400 Initial Deductible (many people are enrolled in a Part D plan with a $0 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%) (your Medicare Part D drug plan may have a fixed co-pay amount for all the drug tiers, not a percentage of drug retail costs),

(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 $4,950 out-of-pocket threshold or TrOOP.
 
The amount that you could save would be about $2,458.50 (or 60% of $4,097.50).
 
And here is our math along with a few more assumptions:
  • Your 2017 Medicare Part D Initial Deductible: $400.

  • The standard 2017 Initial Coverage Limit: $3,700 (or the total retail drug cost).

  • You have a 25% cost-sharing - so, of the $3,700, you pay $825 during the Initial Coverage phase (.25 x ( $3,700 - $400)) .

  • The remaining balance you need to reach the 2017 Donut Hole exit point or TrOOP threshold of $4,950 is $3,725 ($4,950 - $825 - $400).

  • If you purchase $3,725 in brand-name drugs while in the Donut Hole you get the 60% Donut Hole discount on your purchases, so you pay $1,490 (.40 x $3,725) -- but you only get credit for $3,352.50 toward meeting the $4,950 TrOOP threshold or Donut Hole exit point (not the full $3,725).  Since you only get credit for 90% 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 ($3,725) by .90 for a total of $3,352.50. Or you can look at it as -- you actually have to buy $372.50 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 $2,458.50 or ($3,725 + $372.50 = $4097.50) x 60%.

If you had a Medicare Part D $0 Initial Deductible, your savings would be $2,656.50 or $198 more in savings as compared to a Medicare Part D plan with the standard $400 Initial Deductible.

    Please note:  If you select a 2017 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 2017 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 2017 Donut Hole where you get the 60% 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 #530 for examples of the maximum Donut Hole Discount savings for other plan years or see our Blog for more about Donut Hole discounts.

    Our 2017 PDP-Planner (or Donut Hole Calculator) is available to illustrate your monthly estimated costs for 2017. 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 2017 Medicare Part D drug coverage.
     



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