Most Medicare drug plans (Part D) have a temporary limit on what they will cover for prescription drugs. This limit is known as a "coverage gap" or "donut hole." The good news is that all Medicare drug plans provide coverage for patients who have an unexpected illness or injury that results in extremely high drug costs. This is called "catastrophic" coverage.

Catastrophic coverage means that once the patient has paid $4,350 (in 2009) in out-of-pocket for drug costs in a calendar year, almost all of their drug costs above that amount are covered. If the patient's plan has a coverage gap during the time between a drug plan's standard level of coverage and the catastrophic coverage, patients pay all of the drug costs during that "gap." The coverage gap typically does not apply to patients with limited income and resources, and who qualify for full extra help. They will continue to pay the same copayment or coinsurance amount during a coverage gap.


How the Coverage Gap Works*

• Deductible Phase
  Generally, when a beneficiary starts their Medicare Part D prescription drug coverage, he or she must meet a $295 yearly deductible before receiving help with prescription drug costs. In the deductible phase, the beneficiary is also responsible for 100% of prescription drug costs.
  
  
• Initial Coverage Phase
  After meeting the deductible, the patient enters the "initial coverage phase" where he or she will stay until they spend $2,700 in total prescription drug spending. During this initial phase, the beneficiary is responsible for a 25% co-insurance, equal to $601.25.
  
  
• Coverage Gap
  Once a patient reaches $2,700 in total drug spend, the patient will enter the coverage gap. The patient will remain in the coverage gap until he or she spends $4,350 in out-of-pocket costs.
  
  
• Catastrophic Coverage
  After the patient exit the coverage gap, he or she enters the "catastrophic coverage" phase and is only responsible for the letter of 5% or a $2.40 copay for generics and a $6 copay for other medications such as brand name medications.
  

*References 2009 numbers


Tips for Bridging the Gap

Here are some ways patients can avoid or delay entering the gap, and continue to save money on drug costs while in the gap:

• Consider switching to generics, over-the-counter (OTC), or other lower-cost drugs. Patients are advised to ask their doctor or pharmacist about generic, OTC, or less-expensive brand-name drugs that would work just as well as the ones they're taking. Switching to lower-cost drugs may be enough to help patients avoid the coverage gap, and can save them hundreds or thousands of dollars a year.
  
  
• Explore National and Community-Based Charitable Programs (such as the National Patient Advocate Foundation or the National Organization for Rare Disorders). These organizations may have programs that can help with patients' drug costs. Comprehensive information on Federal, state, and private assistance programs can be found at www.benefitscheckup.org.
  
  
• Look into Pharmaceutical Assistance Programs (sometimes called Patient Assistance Programs) that may be offered by drug manufacturers. Many of the major drug manufacturers are offering assistance programs for people enrolled in a Medicare drug plan. Information can be obtained at www.medicare.gov.
  
  
• Look at State Pharmaceutical Assistance Programs (SPAP). There are 23 states and 1 territory offering some type of coverage to help people with Medicare with paying drug plan premiums and/or cost sharing. Information can be obtained at www.medicare.gov.
  
  
• Apply for Extra Help. If patients have Medicare and have limited income and resources, they may qualify for extra help paying for their prescription drugs. Patients can contact Social Security by visiting www.socialsecurity.gov on the web, or call 800.772.1213. TTY users should call 800.325.0778.