Health Care Reform Law Fills in the Hole Gradually Between Now and 2020

Before President Obama signed health care reform, Medicare beneficiaries first paid a deductible of $310 for online prescription drugs. Then Medicare pays 75 percent of charges up to $2,830. After that, coverage would stop cold until all of a senior’s out of pocket spending totalled $4,550. For those who reached this level of cost, which the government calls catastrophic, Medicare picked up again and covers 95 percent of the beneficiary’s drug bills.

The new health care reform law fills in the hole gradually between now and 2020. This year only, Medicare will send about 4 million people who reach the donut threshold a one-time rebate check of $250.

According to Peter Ashkenaz, a spokesperson for the federal Centers for Medicare and Medicaid Services, seniors will receive their checks about a month after they reach the donut hole.

Next year, Ashkenaz explained Medicare patients will receive a 50 percent discount on brand name drugs and a 7 percent discount generic drug brands. “If people need more, they could qualify for extra help and should talk to their state health insurance program and Social Security office to apply for extra help,” he said. The hole will be gradually filled a bit more each year after until it is completely closed over the course of the decade.

Medicare beneficiaries will receive a monthly mailing from Medicare showing how far along they are in spending.

A looming problem, Ashkenaz added, is that seniors need to be wary of scams. For instance, criminals have called seniors to say they are from Medicare and only need your Social Security number and bank information to deposit the $250 in your account.\

Political movers and shakers could not easily deny coverage to very sick people, so they agreed that Medicare should pay for medicine beyond amounts they said would be financially catastrophic for people. So instead of simply stopping coverage at a certain point, they ceased drug reimbursements at a midpoint and agreed to pick up spending again when people reach devastating amounts – amounts attained by a relatively small percentage of Medicare beneficiaries.