- Out-of-pocket costs can be a barrier to care for many patients.
- The Low-Income Subsidy and Extra Help Programs help beneficiaries who qualify with costs related to their prescription drug plan.
- There are many resources dedicated to help provide financial help and education to Medicare beneficiaries to choose a Part D plan and use their benefits.
Medicare Part D Coverage Gap1
Medications are generally covered under Medicare Part D, but patients will often enter a coverage gap phase, also known as the ‘donut hole,’ after the patient and drug plan spend a certain amount during the deductible and initial coverage phase. Summaries of these phases are provided below. This coverage gap may cause patients to have high out-of-pocket costs, causing the price of their medications to be a large burden or unaffordable.
Deductible Phase: A patient’s deductible may vary from $0 to $445. Patients must reach the deductible amount before their Medicare Part D drug plan starts to pay its share of the cost.
Initial Coverage Phase: Once the patient reaches their deductible (if applicable), the patient then pays a fixed co-payment for a drug (eg, $15), or they will pay a percentage of the cost of the drugs with coinsurance (eg, 20%). This will continue until the initial coverage limit is reached. Medications will have different costs depending on their tiers (or levels) in the prescription drug plan.
Coverage Gap (Donut Hole) Phase: Patients in the coverage gap pay no more than 25% of the cost for the plan’s covered brand name or generic prescription medication until the total out-of-pocket costs reaches a certain limit, which varies each year. Out-of-pocket costs include the yearly deductible, coinsurance, co-payments, discounts on brand name drugs in the coverage gap that are paid by the manufacturer, and payments for covered drugs. Costs not included are the drug plan premium, the pharmacy dispensing fee, and patient payments for drugs that are not covered. After this limit is reached, the patient will enter the catastrophic coverage phase.
Catastrophic Coverage Phase: Once the total out-of-pocket cost is reached, the patient will then start paying 5% of the cost of the drug, or $3.70 for generic medications and $9.20 for brand name medications (whichever value is higher).
Out-of-pocket costs can have a large financial impact on patients. It is important to provide patients with education on the available federal assistance programs and patient resources to help ease the burden of medication costs.
Patient Assistance: Low-Income Subsidy2,3
Helps individuals whose income and resources are limited by providing a subsidy paid by the federal government for costs related to a Medicare prescription drug plan, such as monthly premiums, annual deductibles, and prescription co-payments.
- Individuals who have one of the following are automatically enrolled in the Low-Income Subsidy.3
- Dually eligible for Medicare and Medicaid
- Receive Supplemental Security Income
- Qualify for a Medicare Savings Program
- Qualified Medicare Beneficiary
- Specified Low-Income Medicare Beneficiary
- Qualifying Individual
- Those who do not meet the above criteria may still qualify for Extra Help.
Patient Assistance: Extra Help Program3,4
Individuals with limited income and resources may apply with the Social Security Administration (SSA) or with their State Medicaid Agency. Beneficiaries who wish to enroll must choose a prescription drug plan to receive the benefit through.
- Apply at https://secure.ssa.gov/i1020/start, call 1-800-778-1213 for help with application
- Provides around $5,000 per year
- Income Limit
- $19,140 for an individual, $25,860 for a married couple living together
- If your annual income is higher you may still be able to get help if you or your spouse support other family members who live with you or have earnings from work.
- Resource Limit
- $14,610 for an individual, $29,160 for a married couple living together.
- Resources include: Real estate (other than the primary residence), bank accounts, stocks, bonds (including US Savings Bonds), mutual funds, Individual Retirement Accounts, and cash at home or anywhere else. Too see a full list visit: https://www.ssa.gov/pubs/EN-05-10508.pdf
Medicare Part D Senior Savings Model2
Out-of-pocket costs for diabetes management can have a large financial impact on patients with diabetes, especially during the Coverage Gap Phase.
- Allows Medicare part D prescription drug plans to offer plan choices that provide a broad range of insulins for a $35 co-payment.
- Find participating plans at www.medicare.gov.
Other Patient Assistance Resources1
- Medicare Rights Center
- A free national help line for questions about health care coverage, affordability, access to care and more.
- Center for Medicare Advocacy
- Provides legal assistance and education to Medicare beneficiaries.
- Area Agency on Aging
- Nonprofit agency with information about programs, services, and housing options.
- Community Health Worker Program
- Mission to promote and sustain the integration of community health workers into health and human services organizations throughout Michigan.
- Lowering Out-of-Pocket Costs for Older Adults With Diabetes: A Review of Available Federal Assistance Programs and Patient Resources. AJMC. September 15 2020. https://www.ajmc.com/publications/supplement/lowering-out-of-pocket-costs-for-older-adults-a-guide. Accessed November 20 2020.
- The Centers for Medicare and Medicaid Services Guidance to States on the Low-Income Subsidy. CMS. February 2009. https://www.cms.gov/Medicare/Eligibility-and-Enrollment/LowIncSubMedicarePresCov/Downloads/StateLISGuidance021009.pdf. Accessed November 20 2020.
- Checklist: Eligibility for Medication Assistance Programs. CMS. Assessed November 20 2020.
- Understanding the Extra Help With Your Medicare Prescription Plan. SSA. March 2020. https://www.ssa.gov/pubs/EN-05-10508.pdf. Accessed November 20 2020.