Doughnut holes are for pastry shops, right? Wrong. Not when it comes to our friendly Congress passing legislation that makes no sense. A doughnut hole was actually included in the previous prescription drug benefit for seniors and recently corrected in the new healthcare law - it was a hole in payouts for benefits. And when this type of legislation happens, it does spark the thought that lobbying can be very successful. The prescription drug companies have spent millions lobbying Congress and as Open Secrets publishes, the drug company's lobbying dollars match when the legislation gets passed.
So this silly doughnut hole was labeled as such because as a senior you would have a benefit to pay for your prescription drug until you took a big enough bite and hit the "hole" and then there was no benefit paid until you got to the other side of the hole and then it would pay again. Meanwhile, for whatever your health condition is, you need this medication so seniors were very stressed about how they would pay for it while in the "doughnut hole".
I was invited to serve on a research panel, which the government paid for just to make sure that seniors really were confused by their prescription drug plan and that everyone thought the doughnut hole was silly. As I told them, what private paid healthcare plan would ever sell any such thing? They wouldn't, because nobody would buy it.
However, the good news is this: the new healthcare law - nicknamed "Obama Care", has saved seniors $6 billion dollars in prescription drug benefits because it eliminated this doughnut hole. Here is the Health and Human Services news release on the announcement.
Health and Human Services Secretary Kathleen Sebelius announced this week that more than 6.3 million people with Medicare saved over $6.1 billion on prescription drugs because of the new health care law.
“By making prescription drugs more affordable, the Affordable Care Act is improving and promoting the best care for people with Medicare,” Secretary Sebelius said.
The Affordable Care Act makes Medicare prescription drug coverage (Part D) more affordable by gradually closing the gap in coverage where beneficiaries must pay the full cost of their prescriptions out of pocket. This gap is known as the donut hole.
People with Medicare in the doughnut hole now receive discounts when they purchase prescription drugs at a pharmacy or order them through the mail, until they reach the catastrophic coverage phase. The Affordable Care Act gave those who reached the donut hole in 2010 a one-time $250 check, then began phasing in discounts and coverage for brand-name and generic prescription drugs beginning in 2011. The law will provide additional savings each year until the coverage gap is closed in 2020.
In 2013, the health care law increases the discounts and savings to 52.5 percent of the cost of most brand name drugs and 21 percent of the cost of covered generic drugs.
Also under the Affordable Care Act, those who choose to enroll in Medicare Advantage and Part D now have access to a wider range of high-quality plan choices, with more four- and five-star plans than were previously available. The Affordable Care Act continues to make Medicare more secure, with new tools and enhanced authority to crack down on criminals who cheat the program.
Learn more about how the Affordable Care Act closes the doughnut hole.
Review state-by-state information on savings in the doughnut hole.
Learn about senior care costs for long-term care and find nursing homes in your area as you plan for all your senior care needs.