What They Won’t Tell You about the Medicare Coverage Gap Discount Program
Although many people are opposed to the Affordable Care Act (aka Obamacare) for one reason or another, the law is making Medicare prescription drug coverage more affordable by slowly closing the Coverage Gap.
This year, if you reach the gap (also called the donut hole), you will get a 52.5 percent discount on brand-name drugs. That’s up slightly from the 50 percent discount on brands in 2011 and 2012. So if your copayment was $50 for a $100 drug last year, your copay will be just $47.50 for the same drug in 2013.
But here’s the catch: Although the Coverage Gap Discount Program is certainly helpful if you reach the Coverage Gap and use brand-name drugs, what you may not know—and what the big drug companies won’t tell you—is that even with the 52.5 percent discount on brand-name prescription drugs, lower-cost generic drugs are still the best bang for your buck in most cases.
For the past few years, the government and the media have all been touting the brand discount as a great way to lower drug costs when you’re in the Coverage Gap. What they should be telling you, however, is although the discount is helpful, the real savings lie in generics, no matter what stage of the benefit you’re in. Using generic drugs whenever possible will not only delay your entry into the gap, but it can even keep you out of it.
I’ve always recommended FDA-approved generic drugs as one of the best ways to lower your drug costs and delay entering the Coverage Gap. Not only do they generally cost up to 80 percent less than brands to begin with, but this year you get an additional 21 percent discount on generics when you’re in the gap (that’s up from 14 percent in 2012). So even with the 52.5 percent discount on brand-name drugs, generics still provide more value for your Medicare dollars.
Closing the Medicare Part D Coverage Gap
You will continue to save on covered brand-name and generic drugs while in the Coverage Gap until the gap is closed in 2020. Here is what you’ll pay for drugs while you are in the gap:
- 2013: 47.5% for brand-names and 79% for generics
- 2014: 47.5% for brand-names and 72% for generics
- 2015: 45% for brand-names and 65% for generics
- 2016: 45% for brand-names and 58% for generics
- 2017: 40% for brand-names and 51% for generics
- 2018: 35% for brand-names and 44% for generics
- 2019: 30% for brand-names and 37% for generics
- 2020: 25% for brand-names and 25% for generics