Q: Were there changes in the Medicare Part D prescription drug coverage for 2017?
A: Yes. The maximum deductible is slightly higher, and beneficiaries’ costs while in the “donut hole” have continued to shrink.
The Medicare Part D maximum deductible increased again by $40 for 2017, to $400. But many drug plans have no deductible or a deductible that’s lower than the maximum allowed.
The Medicare Part D program was designed with a gap in coverage: prior to the ACA, beneficiaries’ drug expenses (after the deductible) were covered up to a certain dollar amount (on most plans, the beneficiary pays 25 percent of the cost during this phase), then not covered up to another amount, and then more robust coverage would kick in (in most cases, the beneficiary would only pay 5 percent of the cost at this point). The gap in the middle is called the donut hole.
The ACA has been steadily closing the donut hole. Instead of having to pay the full cost of medications while in the donut hole, beneficiaries now pay a percentage of the cost — and that percentage has been declining since 2011.
The initial coverage limit (i.e., where the donut hole begins) is higher in 2017. It was $2,960 in 2015, increased to $3,310 in 2016, and has increased to $3,700 in 2017. Before this amount is reached (but after the deductible is met), the enrollee pays either copays (fixed dollar amounts) or coinsurance (typically 25 percent of the drug’s cost) for each medication they need – the specifics vary from plan to plan. When the total combined cost reaches $3,700 in 2017, the enrollee will enter the donut hole.
The upper threshold for the donut hole also increased in 2017, to $4,950. After your spending has reached this point, you’ll be in the catastrophic coverage range, which means you’ll generally only pay five percent of the plan’s costs for medications.
The percentage you have to pay for brand-name drugs while in the donut hole declined for 2017, after remaining steady in 2016. Once your total drug costs (including what the plan pays plus your deductible and copay) reach $3,700, you will pay 40 percent of the plan’s cost for brand-name drugs. For generics, you’ll pay 51 percent of the plan’s costs – down from 58 percent in 2016.
For brand-name drugs, even though you only pay 40 percent of the cost, 90 percent of the cost is applied to your out-of-pocket accumulation, helping you get out of the donut hole faster. For generics, only the 51 percent that you pay is counted towards your out-of-pocket total (this chart shows how these percentages have been changing since the ACA began closing the donut hole).
By 2020, assuming the ACA’s provisions remain intact, there will no longer be a donut hole – beneficiaries will simply pay 25 percent of their medication costs until they reach the catastrophic coverage level.
Seniors have saved nearly $27 billion on prescriptions since 2010, thanks to the ACA
In January 2017, CMS announced that 11.8 million Medicare beneficiaries had saved $26.8 billion on prescription drugs since 2010, thanks to the ACA’s progress in closing the donut hole. Of that total, $5.65 billion was realized in 2016 alone.
What happens to the donut hole under the Trump Administration?
Congressional Republicans have been moving quickly to begin the process of repealing the ACA. In January 2017, both chambers passed a budget resolution that directs Congressional committees to begin drafting reconciliation legislation to repeal the spending-related provisions of the ACA.
We don’t yet know the exact details of the reconciliation bill, but Congress passed a reconciliation bill (H.R.3762) to repeal the ACA in early 2016, and it’s likely that the 2017 version will be similar. A reconciliation bill can only address federal spending, so it wouldn’t repeal the entire ACA. But it’s noteworthy that H.R.3762 would have repealed ACA Section 9008, which raises approximately $2.8 billion each year by taxing brand-name pharmaceuticals.
Although H.R.3762 didn’t call for eliminating the ACA’s provisions that close the donut hole, it would have cut one of the sources of funding that was used to expand seniors’ access to prescriptions. We don’t yet know what lawmakers will introduce in terms of a replacement for the ACA (assuming a repeal bill passes), or whether the replacement will have enough votes to pass. So at this point, it’s too early to say whether the ACA’s provisions to close the donut hole will continue as-planned.
As with everything about the ACA, there is controversy over whether the donut hole should continue to be closed. Some people think the donut hole is a good thing, and that we should go back to the way it was pre-ACA, when seniors paid the full cost of their medications while in the donut hole. Others think that closing the donut hole is an essential goal for healthcare reform.
Your thoughts on this issue might depend on how expensive your medications are, the type of Part D plan you have, and your income level. If you have concerns about the future of the donut hole — and whether it will continue to be closed or not — under the Trump Administration, reach out to your Representative and Senators to ensure that your voice is heard.