85% of your brand-name drug's retail cost is counted toward exiting the 2018 Donut Hole.
If your monthly purchases of formulary medications consistently have a retail value of
over $313, you will exceed your Medicare Part D prescription drug plan's Initial Coverage Limit (
$3,750 in 2018)
and enter the Donut Hole portion of your Medicare plan.
Once you reach the Donut Hole or Coverage Gap, you will
receive a
discount on the retail prices of your brand-name and generic drug
purchases.
So in 2018, once you reach the Donut Hole, your brand-name drug purchases will receive a 65% Donut Hole discount (you will pay 35% of retail) and 85% of the brand-name drug price will count toward meeting your true
out-of-pocket threshold (
TrOOP)
or Donut Hole exit point of
$5,000.
In general, with the brand-name Donut Hole discount, you will receive credit for the 50% brand-name drug
manufacturer discount
plus the portion of the prescription drug’s retail
price you paid (35% in 2018) - but, you do not get credit toward TrOOP for the portion of the drug cost paid
by your Medicare plan (15% in 2018).
So if you buy a brand-name medication with a $100 retail cost
while in the 2018 Donut Hole, you pay $35 and get $85 credit toward
exiting the Donut Hole or meeting the $5,000 out-of-pocket threshold.
Again, the additional 15% of the “discount” is paid by your Medicare Part D
plan and therefore does NOT count toward exiting the Donut Hole or
reaching your out-of-pocket costs (
TrOOP).
In 2018, generic drug purchases receive a 56% Donut Hole discount (you pay 44% of retail) and
your discounted generic drug cost counts toward meeting your 2018 true
out-of-pocket threshold (
TrOOP or total drug spend) of
$5,000.
So if you purchase a generic medication with a retail value of $100
while in the 2018 Donut Hole, you will receive a 56% discount and pay
$44. The $44 will then count toward meeting your 2018 TrOOP threshold
of $5,000.
Keep in mind that brand-name drug purchases actually get a larger discount and
more of the drug's retail cost counts toward meeting your TrOOP - so it is possible that a brand-name medication may cost your less than a generic alternative - assuming that your Medicare Part D plan covers both the brand-name and the generic equivalent.
Please note, if the retail value of
your monthly formulary medication purchases is consistently over $702, you will most likely exceed your Medicare Part D prescription drug plan's
total out-of-pocket spending limit (TrOOP) (
$5,000 in 2018)
and enter the Catastrophic Coverage portion of your 2018 Medicare plan,
where you will pay around 5% of the retail drug price for the remainder
of the year.
You can read more about the
Donut Hole Discount in our FAQs or in our
Q1Medicare.com articles.