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FAQs We Get About Medicare Part B Premiums

Senior Benefit’s Hagerstown Office

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(301)733-0085
(800) 924-4727

580 Northern Ave
Hagerstown, MD 21742

Hours :

Monday – Firday : 9am – 5pm EST
Sat & Sun: Closed

Senior Benefit’s Thurmont Office

We are here to help. Contact us today!

(301) 271-4040

112A E Main St
Thurmont, MD 21788

Hours :

Monday – Firday : 8am – 4pm EST
Sat & Sun: Closed

Senior Benefit’s Cumberland Office

We are here to help. Contact us today!

(301) 722-1414

309 Willowbrook Road, Suite 1
Cumberland, MD 21502

Hours :

Monday – Firday : 9am – 5pm EST
Sat & Sun: Closed

The Centers for Medicare & Medicaid Services (CMS) released the Medicare costs for 2025. Find out more about what Medicare costs for you in the new year

Medicare Part A Costs 2025

Medicare Part A is designed to help cover the costs of such things as inpatient hospital care and skilled nursing facility care. So lets take a look at what Medicare Part A costs in 2025.

• Medicare Part A Deductible will rise to $1676 which is an increase of $44
• Medicare Part A coinsurance for inpatient hospital stays that last more than 60 days will have a daily co-payment amount of $419 beginning on day 61 thru day 90 which is an increase of $11 per day.
• Medicare Part A coinsurance for inpatient hospital stays that last more than 90 days will have a daily co-payment amount of $838 beginning on day 91 thru day 150 which is an increase of $22 per day.
• Skilled Nursing Facility daily coinsurance will be $209.50 per day beginning on day 21 thru day 100. The daily co-payment is an increase of $5.50 per day.

The Medicare Part A premium has risen as well. Keep in mind that the majority of American retirees do not pay a Part A premium since they have worked at least 40 quarters of Medicare covered employment. For those who did not work enough quarters for premium-free Part A, their costs are as follows:

Common Part A Questions

1. Is the Medicare Part A deductible an annual deductible? No, the Part A deductible can be charged more than once per year. You will be responsible for the Part A deductible for each benefit period (per occurrence) of inpatient hospital care. The benefit period restarts after you have not received any inpatient hospital care for at least 60 days in a row.
2. Is there a limit as to how benefit periods a person can have in one year? No.
3. Are there benefit periods for Skilled Nursing Facility (SNF)? Yes, a benefit period begins the day you are admitted as an inpatient and ends after you have not received any skilled care in a SNF for at least 60 days in a row.
4. Want to view more commonly asked questions about Medicare Part A? Click here.

Medicare Part B Costs 2025

Medicare Part B is designed to help cover medical costs such as doctors, surgeons, outpatient surgery some prescription drugs, and so much more. So lets take a look at what Medicare Part B costs in 2024.

• Medicare Part B deductible will rise to $257 which is an increase of $17
• Medicare Part B coinsurance will remain at 20%

The Medicare Part B premium has risen as well. For those individuals who are not classified as high income earners, the Medicare Part B premium will rise to $185 per month which is an increase of $10.30 per month.

If you are classified as a high income earner you will pay a Medicare Income-Related Monthly Adjustment Amount (IRMAA). It is important to keep in mind that this classification is based off of your IRS tax return from 2 years ago (which may be unknown to many that are new to Medicare). The additional premium you would pay each month for Medicare Part B in 2025 based on your yearly income in 2023 would be as follows:

Common Part B Questions

1. Is the Medicare Part B deductible an annual deductible? Yes.
2. What are Medicare approved amounts? This is the payment amount that original Medicare sets for a specific covered service or item.
3. If I am classified as a high income earner due to my tax returns but I don’t make that much income anymore, can I file an appeal? If you had a life changing event such as death of a spouse, marriage, divorce or annulment, work reduction, work stoppage, loss of income from producing property, loss or reduction of certain kinds of pension income then you can file an appeal. Other situations that would warrant an appeal would be such things as there being an error in the IRS data, the IRS provided older data and you have newer information available that shows lower income, or you filed an amended tax return for the year that the Social Security Administration (SSA) is using to make their classification of you being a higher income earner.

Takeaway

The overall increases released for 2025 are not the worst we have seen, but still will affect the net income a retiree will have each month. The Medicare Part B monthly cost for 2025 will be about 5.90% higher which is higher than the Social Security increase of 2.50%. Call us at (800)924-4727 to check if you can reduce your current Medicare Supplement plan premium or to explore if a Medicare Advantage plan suits you better. One of our knowledgeable advisors will assist you. Prefer to have us call you, then simply click on the box below and provide us with your contact information.

Right now there are many questions as to what the Social Security increase will look like for 2024.

Social Security COLA for 2024

Starting in January 2024 about 66 million folks receiving Social Security benefits will see a 3.20% increase. The cost of living increase (COLA) is calculated based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the 3rd quarter (of the last year a COLA was determined) to the 3rd quarter of the current year. Of course if there was no increase, then there will not be a COLA.

Cost of Living Increases for Social Security from 1975 -2024

While 3.2% might seem quite small compared to last year’s increase of 8.7% it is definitely not the lowest we have seen. In fact, there are several years starting in the 2000s that there was no COLA increase. Below you can see the Cost of Living Adjustments since 1975.

How Benefits Are Calculated

The Social Security Administration will compute your benefits by using your averaged indexed monthly earnings. The average is based on up to 35 years of a worker’s highest indexed earnings. Slated to receive Social Security benefits beginning in 2024? Read more on this, visit the Social Security website

Full Retirement Age for Social Security

Normal retirement age based upon the year of your birth will determine when you can receive full social security benefits. If you were born in 1937 or earlier, then your full retirement age is 65. Starting after year 1937 and up to year 1942 the full retirement age goes up by 2 month increments.

Those folks born between 1943-1954 will have a full retirement age of 66. From years 1955-1959 the full retirement age of 66 will increase by 2 month increments. For those folks born in 1960 and later, the full retirement age is now age 67.

Can you still take benefits at age 62?

So can you still take Social Security benefits at age 62. The short answer is…Yes! Choosing this option will significantly reduce your monthly social security income. You might be wondering how much would the payments be reduced. Lets look at someone who was born in 1953. Today they would be 70 years old, but for this example we are going to say that they started drawing their social security benefits at age 62. Those folks born in 1953 have a full retirement age of 66. By this person taking their benefits just 4 years prior to full retirement benefit age, they would reduce a $1,000 monthly payment by 25%. This means instead of getting the full $1,000 they are only drawing $750 per month.

Assuming a life expectancy of age 80 (without any COLA increases) this individual would receive $180,000 of benefits in their lifetime. If they had waited to full retirement age of 66 then they would receive $240,000 of benefits over their lifetime.

Should I Delay Social Security Benefits?

So if you were born in 1958 you would be age 66 in 2024 and qualify for full Social Security benefits at age 66 and 8 months. So should you delay? Only you can answer that question based on your income needs. If you are at full retirement age, but do not need the additional income, then you can choose to delay. By delaying you will see a noticeable increase in your monthly payments from Social Security.

In this example, we are going to say that a male born in 1966 has decided to not take benefits at full retirement age of 66. Additionally we are going to say that from years 2023-2032 he earned $50,000 per year (while years prior were less, but increased at about 5% per year. The estimated monthly income for this individual at full retirement age of 66 would be right around $1,775. If he were to wait until age 70 then the monthly amount would increase to $2,258 which is a 27% increase.

Some folks would argue that it is a big gamble to delay past full retirement age because you could pass away earlier and not collect as much. This is true, so this is another factor that you must weigh before making a decision.

Key Takeaway

Many of our articles lean towards humor, but lacking funds to cover retirement expenses is no laughing matter. Not only should you be maximizing your social security benefits, but your retirement plan as well.

Your Social Security benefits in 2024 may very well be your primary source of income so it is important to make sure that you are paying the lowest amount per month for your health insurance while getting the benefits that you need.

Always remember, that our advisors help you compare rates and benefits to ensure you get exactly what you need. Give us a call at (800)924-4727 or complete one of our contact request forms below. You can choose between Medicare Supplement or Medicare Advantage. If you would like information on both types of plans in your area, then feel free to submit requests for both.

Trying to determine the best Medicare Supplement rates for West Virginia (WV) can seem quite daunting when surfing the internet.

Great news! After you read this article, you’ll have a clear understanding of the available Medicare Supplement plans and their costs.

We have compiled the best Medicare Supplement rates in West Virginia for different parts of the state.

If there is a particular area that you live in that is not referenced in this article, please feel free to click on any of the buttons throughout the article that will allow you to get a FREE, No-Obligation quote from our company.  If you are interested in rates for other states, we have a great article about Medicare Supplement Plans by State, also.

Medigap Plan F, Plan G, and Plan N

The three most popular Medicare Supplement plans in West Virginia are Plan F, Plan G, and Plan N.

Generally one of these three plans will fit a person’s needs and budget, but if none do, you may want to consider finding out about a Medicare Advantage plan and whether or not it would be suitable for your health insurance needs.

Before discussing pricing, note that those joining Medicare after January 1, 2020, cannot purchase Plan F.  If you pay close attention to the chart below, you will see the only difference between the Plan F and Plan G is that the Plan G does not pay for the annual Medicare Part B deductible.

With Plan G, you will be responsible for the annual Part B deductible which is currently $240 for 2024.

For lower monthly premiums, consider purchasing Plan N. The benefits on Plan N do not cover excess charges like Plans F and G. A small co-pay applies when visiting a doctor or hospital emergency room to help reduce costs.

Best Rates for Medicare Supplement Plans in West Virginia (WV)

It is important to keep in mind that the state of West Virginia does not allow what is called area factoring.  Insurance carriers use area factoring to charge higher rates in zip code areas where Medicare pays out the most claims.

Unlike Virginia, West Virginia residents don’t face higher rates based on their zip code.

West Virginia Sample Medicare Supplement Rates for Plan F, Plan G and Plan N.  Quotes below are for both Male and Female, that are 65 years old and do NOT use tobacco.  We do not include household discounts in the rates shown below, and we round them to the nearest dollar.

It is important to note that the rates for Plan F are for illustration purposes only.  People aged 65 or older who obtained Medicare after January 1, 2020, cannot purchase Plan F.

Do You Need Dental, Vision, and Hearing Coverage?

While seeking the best Medicare Supplement rates in West Virginia, be sure to consider other essential insurance products. Traditional Medicare and Medicare Supplements will typically not cover routine needs for these services.  To properly protect yourself your best option is to enroll in a stand-alone dental, vision, and hearing plan.  This will allow you to have coverage for anything from routine (cleanings, x-rays, etc) to major (crowns, inlays, oral surgery, and more).  Find out more about these plans here.

Take Action To Start Enjoying the Best Medicare Supplement Rates for West Virginia!

Senior Benefit Services, Inc. will be able to help guide you in your search for the best rates for Medicare Supplement plans in West Virginia but one that covers all your needs.  Many factors influence your plan choice; let us simplify the process for you.

Call now at 1-800-924-4727 or fill out the easy and convenient ‘Get Your FREE Medicare Supplement Quote’ form below.

Are you turning 65 this year? Well let us be the first to wish you a Happy Birthday and provide a Welcome To Medicare! Believe it or not, this particular birthday will require you to make a few decisions that could impact you for years to come.

Hopefully you are reading this and have at least 3-6 months before becoming eligible for Medicare. The sooner you get started, the better off you will be. The last thing you want to do is procrastinate and wait until the last minute. Making a major decision in a rush is never a good thing.

Getting Ready

As you can see from the Enrollment Timeline chart that you can take advantage of enrolling into Medicare up to 3 months prior to the month you turn 65 in. Unless you were born on the first day of the month, your Medicare coverage will be effective the first day of your birth month.

If you were actually born on the first day of the month, then your Medicare coverage will be effective the first day of the prior month. To make this easier to understand, lets just say that you turn 65 on the first day of September. This means that your Medicare coverage will actually be effective on the first day of August (the month before).

Choices and More Choices

There are a number of choices that you are going to have to make when it comes to your Medicare coverage. Here are the most common choice folks going onto Medicare have to make:

• Choice 1: Go with just traditional Medicare Parts A and B with a Part D plan.
• Choice 2: Go with traditional Medicare Parts A and B. Enroll in a Medicare Supplement plan and a Part D prescription drug plan.
• Choice 3: Go with a Medicare Advantage plan with integrated prescription benefits.

What’s Your Personality?

We are sure that you have a great personality! What we are really wondering is, are you the type that prefers to sift thru a ton of junk mail (which you will be inundated with), go online and try to learn everything on your own, and then do everything by yourself? There’s nothing wrong with that. In fact, you can find quite a bit of information on Medicare right here on our website. In addition, you can get a jump on reading all about Medicare by reviewing the current copy of Medicare & You by clicking here.

Now if your personality is that you prefer to get information that is 100% dedicated to your specific needs and wants, then Senior Benefit Services makes it easy for you. We will assign you your own personal advisor, who will review your exact situation and needs, when you work with us. This information will be provided to you at no charge. That’s right, there is no cost for this information and guidance.

What To Do Next

Instead of taking any chances, simply contact Senior Benefit Services, Inc at (800)924-4727 and ask to speak to an advisor. Just let your advisor know that you are going to be turning 65 and want to know what your options are. If you would prefer to have one of our advisors reach out to you directly simply click on the box below and provide a little bit of information and we will take it from there.

The Inflation Reduction Act has lots of parts that help make prescription drugs more affordable, including closing the “donut hole” and changing how much money you have to pay when getting your prescriptions through this drug plan. “By 2025, this plan will expand its coverage to include more prescription drugs than today, reducing your out-of-pocket expenses.”

So if you’re on Medicare donut hole or know someone who is, now you know a bit more about how the Inflation Reduction Act helps people save money when it comes to prescriptions – including closing the dreaded Medicare donut and making sure there’s Medicare drug coverage. This way, people with Medicare coverage can get the medicines they need without breaking the bank.

So if you’re dealing with the Medicare donut hole or using Medicare D, now you know a bit more about how the Inflation Reduction Act can help with donut hole coverage.

Part 1: Overview of the Medicare Part D Benefit in 2023

To comprehend the changes and donut hole explanation, let’s first understand how prescription drug coverage, and the Medicare Benefits work. The Medicare D benefit has four distinct phases, determining the share of prescription drugs paid by enrollees, Medicare Part D plans, drug manufacturers, and Medicare coverage. Here’s a breakdown of each phase:

1. Deductible Phase: The Medicare donut phase starts when enrollees pay 100% of their drug coverage costs, up to $505 in 2023. Some Medicare Part D plans don’t charge a deductible, under their prescription drug coverage, but most stand-alone plans do.

2. Initial Coverage Phase: During the Medicare donut hole phase, enrollees pay 25% of total costs, while Medicare D plans cover the remaining 75%, up to $4,660 in 2023. People commonly use copayments and coinsurance in this coverage gap Medicare phase.

3. Medicare Coverage Gap Assistance Phase (Donut Hole): The Medicare donut hole continues as enrollees pay 25% of total costs, including both brand-name and generic drugs. This Medicare Part D plan pays 75% of generic drug costs, 5% of brand-name costs, and drug manufacturers provide coverage gap assistance and a 70% price discount on brands.

4. Catastrophic Phase: The Medicare donut enters its final phase as Medicare pays 80%, while the Medicare D plan pays 15%. You will be responsible for paying 5% of the total cost. If your out-of-pocket expenses, plus any donut coverage on brand-name drugs offered by the manufacturer, add up to more than a certain amount, you may qualify for catastrophic Medicare drug coverage. This means that you won’t have to pay as much and your Medicare coverage can help cover some or all of your remaining costs.

Part 2: Changes Coming in 2024

In 2024, several Medicare donut hole and Medicare D modifications will be implemented to improve the Medicare drug coverage benefit:

1. Elimination of 5% Coinsurance: In this Medicare drug coverage enrollment, specific thresholds determine the amount of money you will have to pay out of pocket for your prescription drugs. Beginning in 2024, the threshold for reaching catastrophic coverage is $8,000. This means that if your total drug costs for a single year hit or exceed this amount, you essentially cap them at $8,000, and don’t need to pay any additional amount. Additionally, before reaching the catastrophic coverage phase, enrollees no longer need to cover 5% of their drug costs as they previously did – they have eliminated this requirement. This change ensures that no one enrolled in this plan has to worry about paying too much for their medications during a single year.

2. Increased Plan Contribution: This Medicare Plan D plan will now be required to pay 20% of total drug costs in the catastrophic phase, up from 15% in previous years.

Part 3: Changes Coming in 2025

As prescription drug coverage evolves, the Medicare donut hole and Medicare D benefit will introduce these changes in 2025:

1. Out-of-Pocket Spending Cap: When you enroll, the amount of money that you will have to pay for your medications out of your own pocket each year is limited to $2,000. This means that no mater how much your medicines cost, you will never have to pay more than $2,000. Every year, this limit might change based on the average cost of medicines for everyone. That way, the limit stays up to date with how much medications cost and you can still get the help that you need.

2. Elimination of Medicare Coverage Gap Assistance Phase: The Medicare coverage gap assistance phase, where enrollees faced 100% of their drug costs, will be eliminated in 2025. Enrollees will no longer experience a change ni their cost sharing when transitioning from the initial coverage phase.

3. Adjustments in Cost Sharing: Medicare Donut Hole Part D plans will help cover the costs of your prescription drugs when they reach a certain amount. When your costs get very high, these plans will pay 60% of what you owe, and the drug companies will reduce the cost of their brand-name medicines by 20%. Before your costs get too high, these plans will still help out – they’ll pay 65% of the cost, and drug companies will reduce the price of their brand-name drugs by 10%. That way, you can get the medicine you need without spending too much.

Part 4: Additional Changes to Part D

1. Affordable Insulin: Starting in 2023, insulin costs will be capped at $35 monthly for all Medicare Part D plans, helping reduce Medicare drug coverage expenses.

2. Vaccination Medicare drug Coverage: The Medicare donut and prescription drug coverage plans will cover adult vaccines without cost sharing, expanding Medicare coverage benefits.

3. Full Benefits for Low-Income Individuals: Beginning in 2024, individuals with incomes up to 150% of the poverty level will be eligible for full benefits under the Part DLow-Income Subsidy (LIS) Program. The act will eliminate the partial LIS benefit for individuals with incomes between 135% and 150% of the poverty level.

4. Premium Adjustments: Starting in 2024, the amount of money that people on Medicare have to pay each year will not be allowed to go up by more than 6%. This means if it goes up at all, it can only go up by a maximum of 6%.

Part 5: Medicare Part D Improved Out-of-Pocket Costs

Starting in 2025, all Medicare donut hole enrollees will have the option to spread out costs over the year instead of facing high Medicare coverage gap assistance expenses in particular months.

Conclusion:

The Inflation Reduction Act of 2022 is making changes that will help make prescription drugs more affordable for people with Medicare and prevent them from falling into the notorious medicare donut hole part . It sets a limit on how much you can have to pay out-of-pocket, ensuring your costs won’t be as high.

Additionally, it eliminates the Medicare coverage gap assistance in coverage, so you won’t have to put up with full price for medications when they are most needed. Finally, they are changing the way we share the cost of medicines. This means both Medicare and you will contribute less money towards medicine costs, providing relief al around. By implementing these changes, the Act aims to reduce healthcare disparities and ensure access for everyone.

The Medicare donut hole coverage part D is an issue that the Inflation Reduction Act of 2022 seeks to mitigate. People with Medicare donut hole will find prescription drugs more affordable due to its changes, and they wont’ have to worry about falling into the Medicare donut hole part D.

Is the Medicare Donut Hole closing? Here we are almost 17 years later and the donut hole still strikes fear into most retiree’s wallets. Is it the actual donut hole that worries most, or is it the unknown? I am willing to bet it is the unknown! Most retirees never receive the necessary information to properly understand the donut hole, determine if their current prescriptions would place them in it, and comprehend how their Part D prescription coverage functions. Let’s take the mystery out of it.

What is the donut hole?

Before we discuss the infamous Medicare donut hole and its closing, lets go back to the beginning.  In 2006 the Medicare Part D program went into effect.  This was the likely one of the biggest changes to the Medicare program in almost 4 decades.  Prior to Medicare Part D, seniors had very limited options for having any prescription drug coverage.

While the introduction of Medicare Part D was a financial lifesaver to many seniors, there were a number of Medicare beneficiaries that would use all their initial coverage benefits and enter the coverage gap, which many folks and the media started calling the ‘donut hole’.  In 2007 (the first full year of the Medicare Part D program), a Medicare beneficiary would enter the donut hole after their drug costs of $2,400 was met (the amount paid by the beneficiary and the insurance company).  At this point you were on the hook for 100% of the drug costs until you reached a total of $3,850 in out-of-pocket costs for the calendar year.

It wasn’t until you exceeded spending $3,850 of your own money that you would enter the catastrophic phase which reduced your costs down significantly.

When is the donut hole closing?

The donut hole actually has been shrinking over the years and finally closed in 2020.  Now seniors pay a percentage of the cost of brand-name and generic drugs during the coverage gap.  A Medicare beneficiary does not enter the coverage gap until they along with their insurance plan have paid out a total of $4,660 in prescription costs.

Right now, you are likely saying to yourself “Whoa…wait a minute, you said the donut hole closed, but I am still paying 25%.”  This can be a bit confusing but let me explain it a bit simpler.  Prior to the donut hole closing you would pay 100% of the costs for the prescriptions during the coverage gap phase, but now you only pay 25%.  That is a 75% reduction in your overall costs.  The donut hole was just a way that folks described having to pay all the costs during the coverage gap.

What else has changed with the donut hole closing?

While the total amount of out-of-pocket spending during the coverage gap has increased over the years, the amount of your out-of-pocket expense being credited has increased.  What this means is that while you might be paying 25% of the costs for a prescription, you are being credited with up to 95% of the actual costs towards getting out of the coverage gap.

Here is an example that will better illustrate the expenses in the coverage gap.

Let’s say that when you enter the coverage gap the retail price for one of your brand-name prescription drugs is $100.  During the coverage gap the insurance plan you have may only pay $5, but you are only charged $25.  The other $70 will be covered by the drug manufacturer’s discount they are required to pay during the coverage gap phase.

How do you track all of your drug coverage phases?

The good news is that you as an individual do not have to track when you enter any of the 4 phases.

• Phase 1 – Deductible
• Phase 2 – Initial Coverage
• Phase 3 – Coverage Gap
• Phase 4 – Catastrophic Coverage

The Medicare Part D prescription drug plan you enrolled in for that calendar year must track this mandatory requirement for you.

What if I get my prescriptions through a Medicare Advantage plan?

The Medicare Advantage plan will track the same information for you as listed above.  Just like a stand-alone prescription drug plan, these plans have a coverage gap but with the closed Medicare donut hole. Remember, you cannot combine a Medicare Advantage plan with integrated drug benefits and a separate Medicare Part D drug plan.

What if I get extra help for Part D?

The Part D low-income subsidy program can reduce or even eliminate out-of-pocket costs.  This of course depends on what level of extra help you qualify for.

If you qualify for full extra help, then:

• There will be no deductible in your plan, nor will you pay a premium for your coverage.
• You will not be paying the 25% in the Coverage Gap phase or commonly referred to as the Medicare donut hole.
• Your co-payments for generic drugs will be up to a maximum of $4.15 and $10.35 for brand-name drugs.
• If you receive Medicaid and your individual income is lower than $14,820 your co-payment for generic drugs will be reduced to a maximum of $1.45 and $4.30 for brand-name drugs.  For those who are married, the income threshold is $19,956 in 2023.
• Once you enter the catastrophic phase you will have no co-pays for your medication refills.

If you qualify for partial extra help, then:

• The monthly premium you pay will be based on your income.
• The maximum deductible your plan can charge is $104
• You will pay a co-insurance for your prescriptions that will be no more than 15% of the price.
• You can qualify for partial extra help if your individual income is less than $22,116 and you have assets that do not exceed $16,660.  For married couples the income threshold is $29,820 and assets cannot exceed $33,240 in 2023.

Starting in 2024 more folks will qualify for full extra help.  If you meet the partial extra help income caps you’ll likely qualify for full extra help starting in 2024.  Additionally in certain states there may be a premium subsidy for Medicare Part D plans.

Takeaway Points

• Technically, the closure of the Medicare donut hole occurred in 2020.
• You are only responsible for 25% of the drug costs in the coverage gap but receive 95% credit towards getting out of the coverage gap.
• You may qualify for extra help.

When you are a Medicare Supplement client through us, our advisors happily assist with Medicare Part D plans each year.  Not a Medicare Supplement client with us yet?  Give us a call at (800)924-4727 to see if we can lower your current Medicare Supplement/Medigap monthly premiums. Want a quote now? Simply click on the button below to get a NO COST or obligation quote.

This article will focus primarily on the Medicare donut hole, but we will also show how you will move thru each phase of a Medicare Part D prescription drug plan. Every year, from October 15 to December 7, during the Medicare open enrollment period, beneficiaries have the opportunity to enroll in a plan that offers Part D prescription drug coverage.

This can either be a stand-alone prescription drug plan (PDP) for those in traditional Medicare or a Medicare Advantage plan which includes all Medicare benefits, prescription drugs inclusive (MA-PD). In 2022, out of the 65 million people Medicare covers, 49 million are enrolled in Part D plans. More than half of these (53%) have enrolled in MA-PDs and 47% in PDPs.

Understanding The 4 Phases of Part D Prescription Plans

Prescription drug coverage operates through several stages. The initial phase begins with the effective date of your prescription drug plan, which is often January 1.

During this first phase, you must reach your deductible, which can be up to $505. You must pay this amount entirely.

Once you’ve satisfied the deductible, you progress to the initial coverage phase. Here, you’re only responsible for making copayments. When your drug costs escalate to $4,660, you transition into the donut hole stage.

While residing in the donut hole stage, you are obligated to pay 25% of the cost for both generic and brand-name drugs, until your out-of-pocket expenses total $7,400. As soon as you exit this gap, the final phase known as catastrophic coverage begins.

It is also important to keep in mind that your plan premiums do not count towards these phases. To understand a bit more about Medicare Part D plans and also penalties that can be incurred click here.

How have the Medicare donut hole regulations changed for 2023?

The designers of the Medicare Part D program intentionally included a coverage gap, commonly referred to as the “donut hole.” Prior to the Affordable Care Act, the program provided coverage for beneficiaries’ drug expenses up to a specific dollar amount after the deductible. On standard plan designs, beneficiaries paid 25% of the cost during this phase. Coverage then ceased completely until beneficiaries reached another expenditure level, after which more robust coverage kicked in. Beneficiaries then paid 5% of the cost or a nominal copay at this point.

What the heck is the Medicare donut hole?

The designers of the Medicare Part D program incorporated a coverage gap, commonly referred to as the “donut hole.” Before the Affordable Care Act, the program covered beneficiaries’ drug expenses up to a specific dollar amount after the deductible. On standard plan designs, beneficiaries paid 25% of the cost during this phase. Coverage then ceased completely until beneficiaries reached another expenditure level, after which more robust coverage kicked in. Beneficiaries then paid 5% of the cost or a nominal copay at this point.

Is the Medicare donut hole something I will encounter?

Over the last few years, the donut hole has actually closed.  Beginning in 2020, Medicare beneficiaries no longer had to pay the full cost of their medications while in the donut hole. Instead, they would now pay 25% of the cost during this period. That 25% cost share is what you still would pay during this phase. Depending on their plan design, however, there may still be differences in costs before and during the donut hole.

If my drug costs are high and I enter the donut hole, what will I be paying?

Once you reach the donut hole after spending $4,660 on your medications (in 2023), you will pay 25% of the cost of drugs. If your plan is designed with a copay instead of coinsurance before the donut hole, then your costs may change once you enter the donut hole. However, if you reach the catastrophic coverage stage, out-of-pocket costs decrease significantly.

Navigating the world of Medicare can be daunting. One of the most confusing aspects is the infamous “Medicare donut hole.” Before reaching this point in your Part D plan, your out-of-pocket costs are primarily covered by your copay or coinsurance. However, once you enter the donut hole, things change. Suddenly, the drug manufacturer provides a discount that mostly covers the cost of your brand-name drugs, while your coinsurance and Part D plan continue to cover generic drugs. It’s important to be aware of this shift and to educate yourself on the ins and outs of this notorious Medicare donut hole.

Exiting The Medicare Donut Hole and Entering Catastrophic Phase

If you’re enrolled in Medicare and regularly take prescription drugs, you might have encountered the term “donut hole.” It’s the coverage gap where you’re responsible for a portion of your drug costs until you reach the catastrophic coverage level. Unfortunately, the spending required to get there has been increasing over the years. In 2023, you’ll need to spend $7,400 before your coverage reaches the catastrophic level. Any discounts you receive from drug manufacturers for brand-name drugs will count towards reaching the threshold. Once you reach the catastrophic level, your drug costs will be significantly reduced. In fact, starting in 2024, there will be no out-of-pocket costs during that coverage level.

There’s more good news. With each prescription refill, you accumulate a higher amount in your out-of-pocket expenses. This means you will transition into the catastrophic coverage phase earlier.  Starting in 2024 the Inflation Reduction Act will eliminate the 5% coinsurance requirement in the catastrophic phase. You can read very informative article from the Kaiser Family Foundation that takes a very deep dive into Medicare Part D here.

What You Will Encounter in 2023 for the Medicare donut hole!

While each year looks to enhance the Medicare Part D program, lets focus back in on this current year.  Once again, if the total amount of expense paid out of your pocket combined with the expenses paid by your drug plan reaches $4,660 then you will move from the Initial Coverage phase into the Coverage Gap/Donut Hole.  After you enter the donut hole, your out-of-pocket spending combined with manufacturer discounts will count towards your $7,400 maximum in this phase.  Once you reach this maximum then you move into the catastrophic phase.  For year 2023 your out-of-pocket costs while in the catastrophic phase would be as follows:

• $9.20 co-payment or 5% coinsurance (whichever is greater) for Brand Name drugs
• $3.70 co-payment or 5% coinsurance (whichever is greater) for Generic drugs

Final Note

Though the out-of-pocket expenses may appear daunting and somewhat intimidating, estimates suggest that only about 12% of Medicare Beneficiaries will progress to the donut hole phase. Additionally, projections indicate that a mere 4% of Medicare Beneficiaries will advance to the catastrophic phase. Still need more help with your Medicare Part D prescription drug plan, then feel free to reach out to us at (800)924-4727.