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Question: I go into my Doughnut Hole every year. I’ve heard it’s going away in 2020. How will that affect me? I assume this is going to save me money.

Answer: This is a very sour subject with me. It doesn’t appear that anyone knows what’s going to happen regarding the Doughnut Hole in 2020. When doing research for this column, I got conflicting information. Several publications I found stated the Doughnut Hole is completely going away next year and one might come to the conclusion that people will no longer have to pay hundreds or thousands of dollars for drugs while in the Doughnut Hole as they do today. Many other articles I found that were written in 2018 stated it was going away in 2019, which wasn’t true. I have also read others that state it isn’t going away and the cost one pays in the Doughnut Hole will continue to be burdensome. 

I want to explain what the Doughnut Hole is for those who may not be aware. In virtually all Medicare Prescription drug plans, aka Part D, there’s a limit to how much money’s worth of prescriptions one can receive. This year that amount is $3,820. Once that’s exhausted, you fall into the Doughnut Hole. When that happens, you go from paying a flat co-pay for brand name drugs, around $45 on average, to paying 30% of the retail cost. The $3,820 may sound like a big number, but most brand name drugs now retail for $400-$500 per month. If you take just one, the Doughnut Hole would be reached by August or September and your co-pay would go from the $45 range to between $120 and $150 for the rest of the year. Now imagine taking two of those expensive medications!

Here’s why I’m so upset about this. As the Affordable Care Act was being debated, there was wonderful news that drug manufacturers would be discounting drugs for those who fell into the Doughnut Hole. In 2011 that discount was 50%. The discount gradually reached 70% this year and in 2020 it will be 75%. Sounds great right?

Unfortunately, the reality is those who go into the Doughnut today are paying close to the same, and sometimes even more money for their drugs than when they had to pay full cost for them in 2010. And more people than ever are falling into the Doughnut Hole. That’s because the average cost of brand name drugs has gone up approximately 300% to 400% since 2010. Insulin pens and Advair, two very common drugs taken by seniors, cost around $150 for 30-day supply in 2010. They now cost around $450! That “discount” seniors were supposed to get was negated by increased drug costs. In my opinion this is one of the biggest scams ever to be played out on the American people.

It’s pretty clear to me that Big Pharma was never going to allow their profit margins to be affected. I can’t see them changing their mind now. And even if the Doughnut Hole is eliminated, I don’t see this being a windfall of savings for those on Medicare. Let me explain.

The following is an excerpt from an AARP article I found online: “The Medicare Part D Doughnut Hole will gradually narrow until it completely closes in 2020... However, even after the (Doughnut Hole) is gone, everyone on Part D will still have the same level of cost sharing — about 25 percent — from the time you meet your deductible until the time you reach catastrophic coverage.”

If that’s the case, instead of paying a flat co-pay for brand name drugs of around $45 for at least a few months, people may have to pay the 25% starting in January. That cost would be on average $100 to $125 per month for each brand name drug they take! I don’t know if some plans will offer lower co-pays than the 25% or not. I’ve reached out to a representative of one of the most popular Medicare Advantage Plans in Southwestern PA. I trust him implicitly. He could not tell me what’s going to happen or what medications may cost for seniors in 2020. 

I saw several other articles that lead me to this interpretation of the supposed “closing of the Doughnut Hole.” The discount provided by drug manufacturers peeks at 75%.  However, the Medicare recipient would still have to pay the other 25% once the limit on the amount of drugs one can receive is exhausted. In other words, the Doughnut Hole will no longer exist in name only. However, it will be the status quo as far as when seniors start to pay more for their drugs and what they pay, especially if there aren’t regulations put in place to curtail what I consider to be out of control prices.

So, what can we do about this? It’s not as if seniors’ incomes go up at the same pace as premiums and medical expenses.

We’re going to have to take a wait and see approach as far as the cost of brand name drugs will be in 2020. I’ll know more by this Summer or early Fall at the latest and I’ll share this information with our readers as I receive it.

I also suggest reaching out to your Representatives and Senators both at the local and State level. Don’t just do that via email or voicemail either. Make sure you speak to someone.

You can also look at my previous columns where I have discussed ways to save on prescription costs. Those can be found on our Facebook page or our website, getyourbestplan.com.

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