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.