Prescription drugs can be expensive. In fact, they can be some of your biggest health expenses. That’s why picking a Medicare plan that includes some form of drug coverage is so important. Whether it’s a stand-alone Medicare Part D plan or part of your Medicare Advantage plan, drug coverage can make essential medicine affordable.
But what about medications that cost tens of thousands of dollars per trip? That’s what catastrophic coverage is for. Don’t let the scary name fool you, it can make life-saving medication affordable! You qualify for catastrophic coverage once you reach your plan’s coverage gap threshold.
What is the Coverage Gap?
The coverage gap is the period you enter when your out-of-pocket drug costs reach a certain limit. For 2017, the standard out-of-pocket threshold is $4,950.
Once you fall into the coverage gap (sometimes referred to as the donut hole), you are responsible for all prescription costs. Don’t fret, though! This is only temporary.
Once you reach the out-of-pocket threshold specified in your drug plan, you enter catastrophic coverage. This threshold is different for each plan, so you’ll want to check that limit when choosing a plan.
Into Catastrophic Coverage
Once you reach that threshold, you are automatically enrolled in catastrophic coverage and your drug plan begins covering all but a small part of your coinsurance or copayment for covered drugs.
Generally, this is $2.65 for generic drugs, $6.60 for brand name drugs, or 5 percent of the total cost, whichever is highest.
This coverage will last the rest of the calendar year. On January 1 of the next year, you’ll reenter the Annual Deductible phase of your plan. If your plan doesn’t require a deductible, you’ll enter the Initial Coverage stage.
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Interested in comparing competitive prescription drug plans? The Medicareful Plan Finder shows all the available prescription drug plans available in a given zip code, along with their monthly premiums and annual deductible.
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Thanks to RitterIM for providing this article from their new publication.