| The gap in presccription drug coverage.
Site of Joe Clark Author of
"Common Sense Retirement"
Medicare Gap explained (not justified)
How much is paid prior to the gap.
The coverage gap, sometimes called the "donut hole," is the period in which you pay 100% of your drug costs.
Keep in mind that your costs start over at the beginning of each calendar year (January 1st - December 31st).
This gap does not apply to other medical coverage. Most Medicare Beneficiaries will never reach the gap and most of the ones who do will do so late in the year. This is little consolation if you are among those who do.
Based on Medicare's minimum standard coverage, the coverage gap will work this way in 2010 (Please be aware that plans vary):
When the total cost (what you and your plan pay) for your drugs reaches $2830, you enter the coverage gap.
You then have to pay 100% of your drug costs (negotiated price, not the full retail price) until you reach $4550 in out-of-pocket costs for the year.
This means that you have spent $3610.00 in drug costs while in the coverage gap.
$310 deductible + $630.00 (25% of $2830) + $3610.00 = $4550 out-of-pocket cost.
After you have spent $4550 out-of-pocket, you pay 5% of your drug costs (or a small co-payment) for the rest of the calendar year and your plan pays the rest.
This is catastrophic coverage. (co-pay per Rx usually $1/$6)
For more information get the book
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