Medicare's 2018 Prescription Drug Rules
TIPS FOR AVOIDING THE DOUGHNUT HOLE
There are several stages of your Prescription Drug Plan. Regardless of how much you pay for coverage and how you obtain your plan, as a stand alone policy (PDP), or through a Medicare Advantage plan, the rules are the same.
STAGE 1 - $405
Stage 1 is the deductible, typically $250 to $405 depending on the plan. Some plans don't have a deductible, like most Medicare Advantage Part C plans, or certain PDP plans like Silverscript. In other PDP plans, you may skirt around the deductible if you buy only generic drugs (Tier 1) or Non-preferred generic drugs (Tier 2). Humana's Walmart Rx Plan offers this type of "deductible waiver" benefit.
STAGE 2 - $3,750
This is your coverage limit, that is, the amount of benefits you get each year. Think of this as your "shopping credits". This amount is based on the contracted rate of the medication your taking. The contracted rate is the price the insurance company has negotiated with the manufacturer. If you have a $30 co-payment for a Brand medication, the actual price for the medication might be $200. Your insurance company will report that you have used $200 of your "shopping credits" to Medicare. Once you run out of credits, you fall into the Doughnut Hole.
STAGE 3 - $5,000
When in the Doughnut Hole, your drug costs will increase and you may be responsible for up to 45% of your plan's cost for your medications. The only way out of the Doughnut Hole is for January 1st to come, or you spend a total of $4,950 out of your own pocket (TrOOP - "true out of pocket expense), on things like co-payments and deductibles. Once you spend $5,000 you will move to Stage 4.
STAGE 4 - Catastrophic Coverage
When you have Catastrophic Coverage, you will only pay 5% of the cost of the medication, or $3.35 per bottle, whichever is greater. Catastrophic Coverage will end on January 1st and this entire cycle will start over.