MHI – Q: Are there changes to the Part D program in 2019?

Posted by MedEd at MHI
A: The big change to Part D in 2019 is the elimination of the Donut Hole (also called the Coverage Gap) on brand-name medications.

Let’s take a moment to look at where the Donut Hole has been before we see what’s ahead. Companies who sell Part D plans are required to use a “standard benefit design” or something actuarially equivalent. The standard benefit design specifies the amount of the annual deductible as well as the dollar amounts associated with moving from one cost-sharing level to the next (Deductible to Initial Coverage Level to Donut Hole to Catastrophic Coverage). Most plans choose the “actuarially equivalent” option.

The Donut Hole has been a challenge for Medicare beneficiaries since the Part D program began in 2006. Those who reached the Donut Hole in the early days of the program paid full price for their medications. Fortunately, two key pieces of legislation have reduced the share of the cost that people are required to pay in this cost-sharing level.

The Affordable Act (ACA) implemented a series of gradual decreases in patient responsibility until leveling out at 25 percent of the plan’s retail cost in 2020. This was to represent a closure of the Donut Hole on both brand name and generic medications.

The Balanced Budget Act of 2018 authorized an earlier closure of the Donut Hole for brand name medications. Those who reached the Donut Hole in 2018 paid 35% of their plan’s negotiated retail cost for brand name medications. In 2019, it will decrease to 25%, meaning the Donut Hole will be closed.

Generics will follow suit (decreasing to 25%) in 2020. Patient responsibility will decrease from 44% in 2019 to 25% in 2020. Bottom line – the Donut Hole will be eliminated in 2019 on brand name medications and in 2020 on generic medications.

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