January 24: The Medicare Part D Donut Hole Is Closed

Plus, the latest healthcare and pharmacy news to know this week

The Story

As of January 1, the donut hole for generic drugs has closed. The donut hole, also known as the coverage gap, is one of Medicare Part D plans’ 4 stages of coverage. During this time, patients are on the hook for the full cost of their medications. The gap for brand-name drugs closed in 2019 and, although it is now technically completely phased out, patients will still have to pay a certain percentage of out-of-pocket costs once Medicare reaches its coverage limit.

Why It Matters

Originally, being in the donut hole meant that patients had to pay the full cost of their medications until they reached the threshold for more drug coverage, i.e., catastrophic coverage. However, the gap has been slowly closing since the Affordable Care Act was introduced in 2010.

With the donut hole being phased out this year, patients will now pay 25% of the cost for both generic and brand-name drugs until they reach the catastrophic coverage phase. A 25% coinsurance is equivalent to the maximum amount a patient could pay during initial coverage, prior to reaching the coverage gap. Plus, only a certain amount of the costs paid counts toward their true out-of-pocket (TrOOP) threshold. 

This year, that TrOOP threshold will also grow significantly to $6,350, which is over $1,000 more than what it was in 2019. So patients will likely have to wait for a much longer period of time before they transition to catastrophic coverage where their copays are minimal. All these changes make it even more important for patients, particularly those on expensive medications, to compare Medicare plans. Beneficiaries in Medicare Advantage plans still have an opportunity to compare and switch plans through March 31. 

Other important healthcare news to know:

1. The Supreme Court has declined to fast track a case challenging the Affordable Care Act. Politico.

2. A new virus circulating in China has spread to the U.S. but officials believe public risk is low. AP.

3. Amazon has filed to trademark “Amazon Pharmacy” in Canada, the U.K., and Australia. CNBC.

4. Nasal sprays are the easiest way for untrained individuals to administer naloxone, according to a new study. Drug Topics.

5. A group of health insurers plan to start manufacturing versions of generic medication to lower drug prices. Los Angeles Times.