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Medicare
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Insurance Costs

Learn About the Affordable Care Act

Medicare Part D

Medicare Part D covers prescription drugs. The Affordable Care Act changed Medicare Part D to increase what Medicare pays and lower what you pay. Another change is that the coverage gap -- or 'donut hole' -- will be closed by 2020.

The 'donut hole' refers to the gap in coverage when you were required to pay 100% of the cost. This typically happened when your drug costs reached $2,831 and lasted until you spent $6,440. This affects about 4 million seniors.

The new law will closes the 'donut hole' by 2020.

2010

You received a $250 rebate check in the mail if:

  • You fell into the gap, and
  • You did not receive any other help paying for your prescriptions through programs such as Medicare Extra Help

2011

In 2011, while in the gap you paid:

  • 50% of the cost of brand-name prescription drugs
  • 93% of the cost of generic drugs

Between 2012 and 2020

Every year, after you pay your deductible, you will spend less before Medicare coverage kicks back in.

Year % You Pay for Brand-Name Drugs % You Pay for Generic Drugs
2012 50 86
2013 47.5 79
2014 47.5 72
2015 45 65
2016 45 58
2017 40 51
2018 35 44
2019 30 37
2020 25 25

In 2020, you will pay 25% of all your drug costs. Medicare will pay the difference. That means after you pay your deductible, you will pay only 25% of the cost for prescription drugs up to $6,400. Medicare will pay all costs after that.

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