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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.

Enrollment Periods

Clients who have been receiving benefits from Social Security or the Railroad Retirement Board for at least four months before they turn 65, are enrolled into Medicare Part A and Part B insurance automatically. Those who have not been receiving benefits from disability (or the RRB) must sign up with Social Security to get Part A and Part B coverage. Either way, there WILL be a valid enrollment period to utilize, when enrolling clients into the plan that best fits their needs.  

  • Initial Enrollment Period – begins three months before the month you turn 65; is still open the month you turn 65 and ends three months after the month you turn 65.
  • General Enrollment Period – January 1 – March 31 (annually)
  • Annual Enrollment Period – October 15 – December 7
  • 8-Month Special Enrollment Period – starts a month after the employment ends, or the month after group health plan insurance, based on when current employment ends.
  • Special Enrollment Period - available if you’re a volunteer, serving in a foreign country. 

When Should Beneficiaries Enroll in Medicare?

In some cases, beneficiaries can be penalized for not enrolling into Medicare once they initially become eligible. It’s extremely important to understand what causes a “late-enrollment premium penalty” and exactly how the penalty can be avoided.

Solutions for Seniors 

Restoration of the Medicare Advantage Open Enrollment Period

Centers for Medicaid and Medicare Services (CMS) has taken action based on the 21st Century Cures Act that eliminates the existing Medicare Advantage (MA) disenrollment period and replaces it with a new Medicare Advantage open enrollment period (OEP) that will take place from January 1st through March 31st annually.

 If a beneficiary is enrolled in a Medicare Advantage plan they’ll have a one-time opportunity to:

  • Switch to a different Medicare Advantage plan.
  • Drop their Medicare Advantage plan and return to Original Medicare, Part A and Part B.
  • Sign up for a stand-alone Medicare Part D Prescription Drug Plan (if they return to Original Medicare).

 What can’t beneficiaries do during OEP
Some activities are off limits for beneficiaries. During OEP, they can’t:

  • Switch from Original Medicare to a Medicare Advantage Plan.
  • Join a Medicare Prescription Drug Plan, if they’re in Original Medicare.
  • Switch from one Medicare Prescription Drug Plan to another, if they’re in Original Medicare.

What can’t you do during OEP

  • No soliciting. You can’t share materials advertising the ability to make a plan change or referencing the OEP in any way.
  • No targeting. Don’t purchase a mailing list or do anything else that might help you identify beneficiaries who are in the OEP because they made a choice during the Annual Enrollment Period.
  • No trying to change anyone’s mind. You may not contact former enrollees who have selected a new plan during the Annual Enrollment Period.
  • No sales activities. You can’t engage in or promote any activities that intend to target the OEP as an opportunity to make further sales.

What you can do during OEP

  • Keep marketing! Conduct marketing activities that focus on other enrollment opportunities, including age-ins who haven’t yet made an enrollment decision, and also dual-eligible and LIS beneficiaries.
  • Be responsive! You can send marketing materials to beneficiaries who make a proactive request for them.

For Agent Use Only. Do Not Distribute

2019 Medicare Part A Hospital Inpatient Deductible & Coinsurance.

                                                                          2018                                       2019
Part A Deductible                                         $1340.00                              $1,364.00
61-90 Days                                                       $335.00                                 $341.00
91+ Days (Lifetime reserve days)                   $670.00                                 $682.00
SNF 21-100 Days                                             $167.50                                 $170.50

Medicare Part B
Part B Deductible                                            $183.00                                   $185.00

HDF Deductible                                               $2,240.00                                $2,300.00
OOP Limit Plan K                                             $5,240.00                                $5,560.00
OOP Limit Plan L                                             $2,620.00                                $2,780.00

Part B Premium

Standard monthly                                           $134.00                                   $135.50

​​​​​MACRA Changes to Medicare Supplement Plans Effective January 2020

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) made a significant change to Medicare Supplement plans (sometimes called Medigap). MACRA prohibits Medicare Supplement plans from providing first-dollar coverage of the Medicare Part B deductible for “newly eligible” beneficiaries on or after January 1, 2020. “Newly eligible”individuals are those who turn 65 on or after January 1, 2020, and those who become eligible for Medicare benefits for the first time due to age, disability, or End-Stage Renal Disease (ESRD) on or after January 1, 2020.

Medicare Supplement Plans C and F have traditionally covered 100 percent of the Part B deductible. For that reason, those plans will no longer be options for newly eligible beneficiaries on or after January 1, 2020.

View the MACRA new plan chart for new 1/1/2020 

Currently, Medicare Supplement plan options include 10 standardized plans, each with its own specified benefits/coverage levels. For those individuals eligible for Medicare on or after January 1, 2020, there will only be 8 plans from which to choose. Existing Plans C and F will not be options for these “newly eligible” individuals. In other words, Plans C and F will NOT be available to sell to Medicare beneficiaries who turn 65 on or after January 1, 2020. However, Plans D and G will be available and will have similar benefits to Plans C and F (except for Part B deductible coverage).

Medicare Supplement Plans C and F are NOT being discontinued. If your client is currently enrolled in either Plan C or Plan F, they will still have access to those plans. For those who are eligible for Medicare prior to January 1, 2020, Plans C and F will remain available options, and will include coverage of the Part B deductible.

Because Plan F with a high deductible (which reimburses the Part B deductible) cannot be sold to newly eligible beneficiaries on or after January 1, 2020, it will be replaced by a Plan G high-deductible option. While high-deductible Plan G does not cover the Part B deductible, the amount paid toward the Medicare Part B deductible will also count toward meeting the Plan G deductible.

F, prior to January 1, 2020 or thereafter.

CMS Change to LIS/Dual Special Enrollment Period Effective January 1, 2019

In 2019, the Center for Medicare and Medicaid Services (CMS) will make an important change to the ongoing Special Enrollment Period for Low Income Subsidy or Dual Eligible beneficiaries (LIS/Dual SEP). Current policy allows eligible customers to change their Medicare & Medicaid Advantage Plan, or Part D Prescription Drug Plan every month if they so desire.

Starting on January 1, 2019, the allowable frequency for LIS/Dual SEP will change. Customers who are eligible for LIS/Dual SEP will only be permitted to make changes to their coverage once per quarter during the first nine months of the year: 

  • January – March
  • April – June
  • July – September 

The LIS/Dual Special Enrollment Period may not be used in the 4th quarter of the year (October – December)