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Medicare Part D prescription drug "doughnut hole" will begin to close rapidly in 2011
Medicare Rights Center
The doughnut hole in Medicare Part D, the prescription drug benefit, will begin to close rapidly in 2011. Until now, consumers who reached the doughnut hole—the coverage gap in Medicare’s prescription drug benefit—have been responsible for paying the full cost of their drugs.
But starting in 2011 these consumers will receive a discount on drugs they purchase while in the gap. This change to the Medicare drug benefit, also known as Part D, is the result of the Affordable Care Act (ACA), which gradually phases out the doughnut hole through the year 2020, when it will be completely eliminated.
In 2011, people who enter the gap will receive a 50 percent discount on brand-name drugs and a 7 percent discount on both generic drugs and drugs compounded at the pharmacy. Furthermore, the 50 percent discount will count toward consumers’ out-of-pocket limit, which is used to determine when they get out of the doughnut hole and enter catastrophic coverage. This means Medicare consumers will spend less while in the doughnut hole.
Also as a result of the ACA, the Social Security Administration (SSA) published an interim final rule regarding the assessment of higher Part D premiums for higher-income Medicare consumers beginning next year. From 2011 through 2019 individuals who have modified adjusted gross income (MAGI) at or above $85,000 per year and couples whose MAGI is at or above 170,000 per year will be subject to additional premiums for Part D. The premiums will be assessed on a sliding scale that is pegged to income levels. The extra amount will, in most cases, be directly deducted from the individual’s Social Security check. While the income thresholds of $85,000 and $170,000 will be frozen through 2019, SSA may change them after that year.
