From a Donut Hole to Zero Coverage?
/Many have probably heard of a Medicare donut hole before but may not know what it is. This is a coverage gap in most Medicare Part D plans that kicks in after a plan participant has spent $5,030 on covered drugs this year. The plan then pays a certain percentage of covered drug costs until the participant reaches $8,000 in out-of-pocket costs on covered drugs. This has been a long-standing pain point for Medicare Part D plan participants.
Theoretically, however, the donut hole coverage gap is ending on December 31, 2024. Beginning in 2025, all Medicare Part D plans will include a $2,000 cap on what plan holders pay for out-of-pocket prescription drug costs covered by their plan. The operative word here being “covered”. Not every plan covers every drug and plan issuers can change their covered drugs from year to year with zero notice to plan participants.
If one of your regular prescriptions is covered under your plan’s drug formulary this year, it’s possible it may be dropped from the plan in 2025 without you knowing about it. If the prescription is not covered under the plan’s drug formulary, you may be on the hook for the entire cost of your prescription or forced to find a covered alternative. Therefore, it is imperative to review your Part D coverage and find out if your prescriptions will be covered under your current plan next year before accepting a renewal.
Medicare’s annual open enrollment period started October 15th and runs through December 7th. If you haven’t reviewed your Part D coverage for next year, now is an excellent time to do so by reaching out to your Medicare insurance agent to prevent you from ending up with unexpected out-of-pocket costs in the new year.
- Margaret Gooley, CFP®, CDFA®, Worley Erhart-Graves Financial Advisors
