If you’re turning 65 or becoming Medicare eligible one of your challenges is choosing a drug plan. Many are confused by the term “Donut Hole” (also called the Coverage Gap). Medicare Prescription Drug Plans have four parts or phases, Initial Deductible, Initial Coverage, Donut Hole and Catastrophic. To understand the Donut Hole it’s important to understand each of these parts.

1. The drug plan you choose for 2023 might have no deductible or a deductible as high as $505. Many drug plans have no deductible on the inexpensive generic drugs, but have deductibles on the more expensive brand drugs. This is one way the insurance companies that market these plans control their costs and encourage their members to use generic drugs whenever possible.
2. After the initial deductible (if there is one) is met you enter the Initial Coverage Phase. During this period you only pay a copay or a percentage of your prescription drugs. If you purchase a drug with a retail value of $100, but pay $30, the entire $100 counts toward your Initial Coverage Limit. When the retail amount you are paying for all your drugs reaches $4,660(your Initial Coverage Limit for 2023) you have entered the Donut Hole Phase. Another way to say this is when what both you and your Part D Insurance Plan are paying for your drugs reaches $4,660 you’re in the Donut Hole.
3. While in the Donut Hole you will pay 25% for your brand-name drugs and generic drugs. When the total amount that you and your Part D Insurance plan reaches $7,400 you will exit the Donut Hole and enter the Catastrophic Phase.
4. During the Catastrophic Phase you pay the greater of 5% of retail or $4,15 for generic drugs.  For all other drugs (such as brand-name medications) you pay the greater of 5%  of retail or $10.35.

1.Make sure you have a current copy of Medicare & You. This handbook has details about what Medicare covers and provides websites and phone numbers where you can get additional information.

2.Remember that if Medicare does not pay for a medical procedure your Medicare Supplement will not pay for their share. If you are uncertain if a procedure is covered, you can probably find the answer in Medicare & You. You can also call Medicare at 1 800 633 4227 and they are opened 24 hours per day, seven days per week.

3.During Open Enrollment, which is from October 15^th through December 7^th, you can change Medicare drug plans. Also during this period you can change from a Medicare Supplement to a Medicare Advantage plan. Unless you have creditable drug coverage from a previous employers or the VA, do not drop your Medicare Drug Policy without enrolling in a new one. Medicare Beneficiaries who have gaps in coverage normally pay a penalty when they enroll in a Medicare Drug plan in the future.

4. Medicare Prescription Drug plans often make changes to their formularies, deductibles, preferred pharmacies and other features from year to year. Also, often Medicare beneficiaries have changes in their medications. It is in your best interest to register on http://www.medicare.gov and store your prescription drugs as well as preferred pharmacies on their site. This will allow you to quickly check during Open Enrollment to see if you need to change to a different Medicare Prescription Drug plan.

5. To ensure you pay the lowest amount for your prescription drugs make sure you obtain them from an pharmacy that your Medicare Drug plan considers a preferred pharmacy.

6. If your doctor recommends  you take a new drug that is not in the formulary of your current Medicare drug plan, you can contact their customer service and request an exception.

7.You can apply for a different Medicare Supplement at another insurance company any time of the year. Medicare beneficiaries sometimes do this when they find a company with a much lower premium. However, unless you have a guarantee issue because your current plan is being cancelled, you will have to go through medical underwriting. This means the insurance company will ask you medical questions, review your medical records and can decline you.

8. Even if you are enrolled in a Medicare Supplement that provides coverage in a foreign coverage, the coverage is limited and is not the same coverage that you have in the United States. Also, your Medicare Supplement will not pay its share until Medicare pays. Since a hospital in a foreign country is unlikely to file claim with Medicare, you may be required to pay your medical expenses and file a claim for reimbursement when you return home. It may be in your best interest to purchase trip insurance. 

Be aware of these requirements and procedures to avoid losing your government subsidy or paying back a huge amount when you file your tax returns:

1. Often the method to make your first insurance payment (called the binder payment) for a Marketplace policy is different from the subsequent payments. This means you will receive an invoice every month unless you contact your insurance company and arrange for an automatic draft from your checking account, savings account, credit card or debit card. I’ve had several customers ignore invoices thinking they were on automatic bank draft when it had not been set up. Unfortunately, some did not realize the problem until they lost their insurance policy and could not re-apply again until Open Enrollment.

2. Make sure you register on the website of your health insurance company.  Although you will have a customer service number, this will give you a chance to view your claims, payment history and find information without making a phone call. Also, sometimes these sites offer discount coupons.

3. Read your Marketplace Letter carefully. The Marketplace sometimes requires you to provide additional information several weeks after your policy begins. The type of information can be proof of your income, citizenship, identity or proof that you are in the U.S. legally. Even if you are paying your insurance premiums on time, the Marketplace will stop your government subsidy if you do not comply with their requests. This information can be uploaded to their website or mailed. If you mail it, make sure you follow their guidelines and include the barcode in Marketplace letter. Normally your insurance agent can upload your documents on your behalf.

4. When you apply for a government subsidy you provide an estimate of your Modified Adjusted Gross Income (MAGI). Your subsidy is based on your MAGI, age, zip code and household members. Every January the Marketplace will mail 1095 A forms to heads of households receiving a subsidy. The information on the 1095 A is used to complete the 8962 form, which is used to reconcile the estimated income that you provided to the Marketplace with your actual income. If you don’t receive the 1095 A form, you can retrieve it at Healthcare.gov, call the Marketplace at 1 800 318 2596 or contact your agent. Even if you are only on a Marketplace policy for a short period you are required to complete this form. Failure to do this can prevent you from obtaining a subsidy in the future. 

5. If you have a change in circumstances such as a new job where you make a higher income or are offered health insurance, make sure you contact the Marketplace. A higher income needs to be reported because your new income could cause you to lose all or part of your subsidy. If your new job offers health insurance that is compliant with the Affordable Care Act, you are not allowed to receive subsidy unless your premium is more than 9.12 % of your Modified Adjusted Gross Income. Failure to comply with this policy could cause you to pay an IRS penalty.

6. Do not call your health insurance company to cancel your health insurance policy. Instead call the Marketplace at 1 800 318 2596. Once the Marketplace receives your request, they will contact your insurance company and cancel your policy.

7. Changes such as your marriage status, dependents, a member becoming eligible for Medicare or address should be reported to the Marketplace immediately since these changes can affect the amount of your subsidy, policies available and your premium.

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8. If you plan a trip outside of the United States, make sure your policy will provide the medical coverage you need. You may need to purchase Medical Trip Insurance. 

If you have recently moved to the Raleigh Durham area and need assistance finding a Duke primary care or specialist doctor, the Duke Consultation and Referral Center can help. They are open Monday through Friday from 8:00 AM until 5 PM. Whether you or not they are Medicare eligible, my clients have found this number helpful. The Duke Referral Center has also help my customers whose doctors have retired or move to a new area find a new doctor.

Call 1-888-ASK-Duke (275-3853) to request an appointment or visit them on-line at dukehealth.org.