Reporting from Washington — Many seniors today find themselves unable to afford prescription drugs even if they have a drug benefit plan under Medicare. The healthcare bill that became law last month aims to fix this problem. But many of those provisions won't be fully implemented for years.
What is the "doughnut hole," and how do I know if I'm in it?
Seniors who are enrolled in a Medicare Part D plan pay 25% of the cost of prescription drugs until the total reaches $2,830. At that point, enrollees must pay the full cost of their drugs until their total out-of-pocket spending reaches $4,550, when catastrophic coverage kicks in and the enrollee pays 5% of drug costs for the rest of the year.
The gap between the yearly limit and the point at which catastrophic coverage kicks in is called the "doughnut hole." If you've seen a sudden and steep increase in the cost of your prescriptions since January, you've probably reached the doughnut hole.
According to a recent study led by Susan Ettner, a professor at UCLA's Geffen School of Medicine, there were 3.4 million people enrolled in the Medicare Part D program in 2006. About 16% entered the coverage gap. Nearly 3% reached it within the first three months of the year. Those most likely to reach the doughnut hole were women and people with diabetes and dementia, the study found.