Medicare 'Doughnut Hole' Will Close in 2019

Medicare beneficiaries with high annual prescription drug costs will get some relief a year earlier than expected as a result of the budget deal President Trump signed early Friday.

Part D beneficiaries who have high prescription drug expenses currently have to pay more once the total cost of their medicines reaches a certain threshold. That’s due to a quirky aspect of Part D called the coverage gap, also known as the "doughnut hole."

The doughnut hole has been narrowing each year since the Affordable Care Act (ACA) was passed in 2010. The gap was scheduled to close in 2020, when beneficiaries would be expected to pay 25 percent of the cost of all their prescriptions while they were in the gap.

Under Friday’s budget deal, the doughnut hole will now close next year. Beginning in 2019, Part D enrollees will pay 25 percent of the cost of all their prescription drugs from the time they enter the gap until they reach catastrophic coverage. 

For 2018, the threshold for entering the doughnut hole remains at $3,750 worth of drug costs. Once a Medicare enrollee passes that limit, he or she is in the coverage gap and will have to pay 35 percent of the cost of brand-name drugs and 44 percent of generics. They will continue to pay those costs until their out-of-pocket spending reaches $5,000. Once they hit that limit, they’ll no longer be in the doughnut hole and will pay no more than 5 percent of their drug costs for the rest of the year.

Congress made the early close of the doughnut hole possible by requiring certain pharmaceutical manufacturers to pay more of the costs for enrollees who are in the coverage gap. Currently, brand-name drugmakers pay 50 percent of enrollees’ brand name drug costs while they are in the coverage gap. Under Friday’s budget law, they will now pay 70 percent.

Restoration of the Medicare Advantage Open Enrollment Period

The 21st Century Cures Act eliminates the existing MA disenrollment period (MADP) that currently takes place from January 1st through February 14th of every year and, effective for 2019, replaces it with a new Medicare Advantage open enrollment period (OEP) that will take place from January 1st through March 31st annually. The new OEP allows individuals enrolled in an MA plan to make a one-time election to go to another MA plan or Original Medicare. Individuals using the OEP to make a change may make a coordinating change to add or drop Part D coverage. Click here for further details

​​​Prepare for Upcoming Medicare Supplement Changes 2020​​​ 

1. What is the Medicare Access and CHIP Reauthorization Act of 2015? (MACRA)
MACRA has many components, one of which is a limit on first dollar coverage in certain Medicare supplement insurance plans for individuals considered “newly eligible”

2. Who is considered newly eligible?
“Newly eligible” is defined as anyone who is turning 65 on or after January 1, 2020 or anyone who is eligible for Medicare benefits due to age or disability as defined by the Centers for Medicare and Medicaid Services (CMS) on or after January 1, 2020.

3. What does MACRA require?
As of January 1, 2020 MACRA does the following:

  • Prohibits first dollar Part B deductible coverage on Medicare Supplement so Plans C and F cannot be sold to those “newly eligible” for Medicare.
  • Makes Plans D and G the new guaranteed issue plans for those who are “newly eligible” within the guaranteed acceptance rules for Medicare Supplement plans.

 4. How are enrollees in current Plans C and F affected?
No change. Plans C and F can still be sold after January 1, 2020 BUT only to Medicare beneficiaries who were age 65 PRIOR to 1/1/2020 or first became eligible for Medicare PRIOR to 1/1/2020 regardless of what plan they had previously.

  • Plans C and F are NOT going away. Current policyholders can continue with their Plan C or Plan F and may continue to buy Plans C and F beyond January 1, 2020. Example: A customer who bought Plan F (or any other plan) in 2018 can purchase any plan, including C and F, prior to January 1, 2020 or thereafter.

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2018 Medicare Part A Hospital Inpatient Deductible & Coinsurance.

                                                                          2017                                       2018
Part A Deductible                                         $1,316.00                              $1,340.00
61-90 Days                                                       $329.00                                 $335.00
91+ Days (Lifetime reserve days)                   $658.00                                 $670.00
SNF 21-100 Days                                             $164.50                                 $167.50

Medicare Part B
Part B Deductible                                            $183.00                                   $183.00

HDF Deductible                                               $2,200.00                                $2,240.00
OOP Limit Plan K                                             $5,120.00                                $5,240.00
OOP Limit Plan L                                             $2,560.00                                $2,620.00

Part B Premium

Standard monthly                                           $134.00                                   $134.00


Starting in April 2018, Medicare will begin sending new cards to people who receive Medicare benefits. Read more on ASG about changes coming next year. 

​Here's what you need to know to answer your clients' questions:

  • All existing Medicare cards should be replaced by April 2019.
  • The new cards will no longer display SSN-based Medicare numbers, reducing the risk of fraud for about 58 million Americans.
  • Both old cards and new cards can be used from April 2018 to January 2020.
  • Starting January 1, 2020, new Medicare cards will need to be used and old cards will no longer be accepted.

You can assure your clients that their Medicare benefits will not change. Get the answers to other common questions onNew Medicare Cards FAQ