WHAT IS THE MEDICARE DONUT HOLE? Your Prescriptions Could Be Affected! If you’re receiving your medications under Medicare Part D, then it’s vital that you understand the “donut hole.” The donut hole, otherwise known as the coverage gap, is one of the stages you can encounter as a part of Medicare’s Part D prescription drug plan. Here’s what you need to know. WHAT IS THE DONUT HOLE? Many of the medications you get are covered in some sort of drug plan. If you’re getting your prescriptions from Medicare Part D, you may be required to meet a deductible. While deductibles vary between Medicare drug plans, no plan can have more than a $505 deductible in 2023.
While young adults of previous generations were usually left to sink or swim after leaving home, it is now commonplace for parents to provide financial support to their adult kids. A 2018 Merrill Lynch Age Wave survey found that 79% of respondents help their adult children financially, providing an average of $7,000 annually. Many parents feel it’s a moral obligation. But how much should you support your adult child — and how do you know when it’s time to stop? Modern parents have good reasons to help their kids into adulthood. Housing prices have increased, entry-level jobs often pay poorly, and many young adults struggle with student debt. Parents often support their kids temporarily until they get on their feet. But months can turn into years without significant progress toward self-sufficiency. One way to tell it’s time for a change is by looking at your own finances. Are you meeting your own goals? If you’re struggling to pay bills, racking up credit card debt, or failing to save for retirement sufficiently, you’re helping your children to your own detriment. Further, you risk reversing the arrangement, thus relying on your child for financial support in the future. So, confirm your retirement goals are on track and that your contributions are affordable. It’s also worth considering whether you’re preventing your adult child from learning important life lessons. If they struggle to budget or habitually misspend money, regularly bailing them out hurts them more than it helps. And don’t forget about the emotional component of your financial support. If you feel like your kids are taking advantage of you, then something is wrong and needs to change. Whatever your reason for reconsidering, prepare for a challenging conversation. You may feel guilty, and your child may become very upset. Take time to understand your reasons for ending or reducing your support and plan what you want to say. Most importantly, give your child time to process the news financially and emotionally. Avoid ending support suddenly if possible so they have time to prepare for their future finances. Wanting to help your kids is normal, and it can be hard to let go or watch your children struggle. But limiting your support, saying “no” to monetary requests, and putting your needs first is okay. Especially if your assistance has put your financial, mental, or emotional health at risk, it’s time to reconsider what works best for the entire family. SHOULD YOUR ADULT CHILD PAY THEIR WAY? When to Close the Bank of Mom and Dad
Once you meet your deductible, your initial coverage stage will start, and Medicare Part D will help pay for a portion of your prescription costs. However, once you and your plan pay $4,660, you will enter the coverage gap, aka the donut hole.
HOW DOES THE COVERAGE GAP STAGE WORK? If you end up in the donut hole, then there’s a temporary limit on what your drug plan will cover. If you’re buying generic drugs , you must pay 25% of the cost plus the dispensing fee. Your Part D plan will cover the remaining cost (75%). If you’re purchasing brand-name drugs , you will pay 25% of the cost and the dispensing fee. However, the drug manufacturer and your drug plan will share the remaining costs. The manufacturer will pay 70%, and your drug plan will pay 5%. It’s important to note that the amount you and the manufacturer pay for brand-name medications will count as out-of-pocket spending. Once you’ve spent $7,400 out-of-pocket, you will be out of the donut hole and enter into the final phase of your Part D plan coverage, the catastrophic coverage stage. CAN YOU AVOID THE DONUT HOLE? If you’re at risk of reaching the coverage gap, there are several solutions you can consider. Look into a prescription assistance program, low- income subsidy (LIS) (known as extra help), using generic prescriptions over name brands, or reviewing your drug plan each year to ensure you’re getting the best coverage possible for your medications. To learn more about the coverage gap and your options regarding Medicare Part D and medications, please call your friends at The Medicare Authority! We can help you find a plan and solution that works best for you and your needs.
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