The Part D Donut Hole in 2010, Part 2, The $250 Rebate

The Part D Donut Hole in 2010, Part 2, The $250 Rebate

Information has just come out from Medicare confirming what I blogged about concerning the $250 rebate that beneficiaries who are enrolled in Part D and who hit the “donut hole” in 2010. The donut hole, of course, is the payment band in the Part D prescription drug benefit in which you usually have to pay 100% of the costs of your medicines. (I say “typically” because a number of drug plans do pay limited amounts for some drugs in this band; for example, there may be some coverage for generics.) And it begins to apply after your total drug spending exceeds $2,830, and you have paid $940 out-of-pocket. Again, these figures can vary some plan-by-plan.

This new information indicates that you will automatically be sent a check for $250 if you have already hit the donut hole. And if you have not yet done so, but do hit it later this year, the check will automatically be issued to you. Checks will begin going out on June 10.

Some important points:

The $250 is a set, invariable amount. No matter how deeply or shallowly you fall into the donut hole, your rebate will be the same. “One size fits all.”

The $250 will not count as income for tax purposes. It’s tax free!

If you qualify for any level of Extra Help, you will not get this rebate.

The $250, in the form of a check, will be sent to you automatically by Medicare, not by your Part D drug plan. (The envelope it comes in will say “Medicare Part D”.)

You should absolutely not give anyone any information under any circumstances to get your $250 check. Apparently the scam artists that prey on seniors and the disabled have figured out this is an excellent way to extract critical personal information from you. If anyone calls asking for information, slam the phone down and call 1-800-MEDICARE.

If you believe you qualify for this check but you don’t receive it, you should first call your Part D drug plan and ask them to make sure that they have sent the correct information to Medicare that you have hit the donut hole. If this has been done properly, you should then call 1-800-MEDICARE and ask them to issue you your check.


I would be interested in getting feedback about how well this process works.

Easy Way to Apply for Medicare Only

Medicare has very recently redesigned its website www.medicare.gov and one thing you can now do from there is to actually sign up for Medicare. If you click on
Apply Online For Medicare Now, you will automatically be transferred to the Social Security Administration website, and generally you can just go ahead and use this to sign up for Medicare if:

You are within 4 months of being age 65 or older.
(That is, you are at least age 64 and 8 months.)
You currently have NO Medicare benefits.
You DON’T want to start your Social Security retirement benefits at this time.

And in most cases you will NOT have to either visit a Social Security Office or supply documents to the Social Security Administration.

I used this facility just before I became 65 when you had to enter it directly from the SSA website, and it worked great – my red, white and blue Medicare card showed up in the mail in just a couple of weeks without any further ado on my part. I would be interested in getting feedback from people who try this new portal.

The Part D Donut Hole in 2010

While there are a large number of provisions in the Health Care Reform legislation that was passed in March which affect the Medicare program, and while only some of these directly affect Medicare beneficiaries, one important provision calls for the eventual elimination of the Part D prescription drug benefit’s “donut hole.” This, of course, is the large payment band in which the beneficiary pays 100 percent of the cost of their drugs up to the limit where the “catastrophic band” finally kicks in and pays 95 percent of drug costs. In 2010, under the formal structure established by the Centers for Medicare & Medicaid Services, the donut hole begins after, first, the beneficiary pays all of the $310 annual Part D deductible, and then, second, where the beneficiary pays 25% and the drug plan 75% of the next $2,520 in drug costs. (That is, the beneficiary pays $630 and the plan, $1,890.) Of course, many plans don’t follow this formal structure. (See page 83 of the book for a fuller explanation.)

Importantly, the donut hole will begin to disappear this year. And while the specifics have not yet been announced, President Obama, in his weekly radio address last Saturday, May 8, said that the up to $250 rebate to be paid to beneficiaries who fall in the donut hole in 2010 will begin going out to them beginning June 15. We can expect CMS to give more details on how this will work, but it appears at this point that beneficiaries who have or will fall into the donut hole this year won’t have to do anything special to get this relief; their drug plan will initiate the required action. Stay tuned as this and a few other provisions of the legislation kick in this year.

And one other quick note on the Part D benefit for 2010, which has nothing to do with the Health Care Reform legislation. The income qualifications for Extra Help with the Part D benefit (These are discussed in Chapter 7, which begins on page 99.) for 2010 have NOT changed from the 2009 levels which are shown in the book. Congress had passed other legislation which keeps the 2009 limits into effect until at least May 31, 2010, so the information in the book continues to be correct. The best guess is that additional legislation will be passed to keep the 2009 levels into effect for all of 2010, but I’ll blog about this when it happens.