[2]: 1 In 2006, the first year of operation for Medicare Part D, the doughnut hole in the defined standard benefit covered a range in true out-of-pocket expenses (TrOOP) costs from $750 to $3,600.
(The first $750 of TrOOP comes from a $250 deductible phase, and $500 in the initial coverage limit, in which the Centers for Medicare and Medicaid Services (CMS) covers 75 percent of the next $2,000.)
Medicare Part D beneficiaries who reach the Donut Hole will also pay a maximum of 25% co-pay on generic drugs purchased while in the Coverage Gap (receiving a 75% discount).
Others may qualify after applying through their state Medicaid programs or through the Social Security Administration (SSA) and fulfil income and asset requirements.
In a marketplace review conducted by the Kaiser Family Foundation in 2010, only 40% of eligible low-income beneficiaries who did not automatically qualify for the LIS actually received it.
LIS recipients also benefit from a Continuous Special Enrollment Period to join or switch plans during any time of the year.
[8] The U.S. Department of Health and Human Services estimates that more than a quarter of Part D participants stop following their prescribed regimen of drugs when they hit the doughnut hole.
[12] Among Medicare Part D enrollees in 2007 who were not eligible for the low-income subsidies, 26 percent had spending high enough to reach the coverage gap.
The average monthly premium for stand-alone Part D plans (PDPs) with basic benefits that do not offer gap coverage is $30.14.
[14] In an effort to close the coverage gap, in 2010, the Affordable Care Act provided a $250 rebate check for individuals whose drug expenses took them into the doughnut hole.
[15] For instance, a 50% mark down off brand-name medications financed by the manufacturer and a 7% markdown off generic drugs by the government was introduced in 2011 for patients in the doughnut hole.
Thus, by 2020, Medicare Part D patients will only be responsible for paying 25% of the cost of covered generic and brand name prescription medications following payment of their deductible that year.