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Adios Prescription Drug Donut Hole!

Category: Health and Wellness Issues

September 10, 2022 – There is good news coming for the estimated 1.5 million Medicare recipients who have been affected by the notorious prescription drug donut hole. The relief will arrive in 2025, thanks to the Inflation Reduction Act signed by President Biden. Then the new law will put a $2,000 limit on annual drug copayments by retirees, replacing the current donut hole scheme, which hits people hard when they spend over a certain amount until they hit a catastrophic limit. Along the way monthly insulin charges will be capped at $35 for Medicare recipients in 2023, and in 2024 the 5% copay on charges over the catastrophic limit is eliminated.

Courtesy of Lisa Fotios

Current law requires retirees to pay 25 percent of the cost after they and the government pay a combined $4,430 out for their prescription drugs. The 25% figure lasts until people hit a “catastrophic” threshold amount, currently $7,050, and then they still have to pay 5% over that. Some beneficiaries were paying over $5,000 or even $10,000 because of it. The new limit eliminates these requirements; copayments will be capped at $2,000 in 2025.

The new law is a big win for retirees, and it has been a long time coming. Together with the government’s new ability to negotiate drug prices for Medicare recipients, retirees (and the government) will be saving a lot of money.

Further reading:

Posted by Admin on September 9th, 2022

6 Comments »

  1. Yes this has been a long time coming but to the best of my knowledge this new law doesn’t take effect until 2025. I am 77 and in reasonably good health but it is not a given I will still be around then. I guess we will all see how it plays out.

    by Kathy — September 10, 2022

  2. This plan is great news. One comment on hitting the current donut is I believe it is based on your drug costs, hitting $4,430, not your out of pocket. You really can’t hit the donut way before you out of pocket reaches $4,430. Your catastrophic coverage is based on out of pocket. If I’m wrong please let me know.

    by Bill — September 10, 2022

  3. Great clarifications folks. First, Bill is correct, the coverage gap begins after you and your drug plan have spent a certain amount for covered drugs ($4,430 currently). So you are not out of pocket all of that $4,430. Secondly, Kathy is also right, although parts of the law go into effect immediately. In 2023 drug companies have to pay rebates to Medicare if their prices rise faster than inflation, and monthly insulin charges are capped at $35 for Medicare recipients. In 2024 the 5% copay above the catastrophic limit goes away. In 2025 the donut hole is eliminate, capping out of pocket expenses at $2,000 annually for Part D recipients. We have clarified the original article to add these distinctions.

    by John Brady — September 10, 2022

  4. Still no news on cancer drugs? That seems to be the big issue and potential explosive costs to Medicare recipents, as Medicare is slowly moving cancer drugs to OOP status

    https://www.forbes.com/sites/forbesfinancecouncil/2019/11/18/medicare-out-of-pocket-costs-for-cancer-treatment-every-retiree-should-know/?sh=2cdb2f6b4b4d

    by Dave — September 15, 2022

  5. Having read this new law, it only applies if you subscribe to medicare part D. As a Federal retiree I don’t buy part D, OPM has stated my Federal insurance I carried into retirement meets the requirement I don’t have to buy D. So I am still screwed on insulin?

    These laws should take affect immediately not years down the road.

    Looks like Medicare is going to keep gouging people for the unfounded premium increase over that Alzhiemer? drug they wrongly assumed was going to cost them under federal mandate. They were asked what about that? No comment thus far

    by Dan — September 15, 2022

  6. So today BIG Pharma announced news about a “promising new drug for Alzheimer’s. Forgive me if I am skeptical. Nobody knows better than I as a retired geriatric nurse how such a drug is needed.
    Also medicare announced the new premium for medicare part d for 2023. I am underwhelmed about a seven dollar decrease. Once again the seniors take a hit.

    by Kathy — September 28, 2022

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