Coverage Gap (2012)

Looking for 2011 coverage gap information? Click here.

There are three phases of Medicare Part D prescription drug coverage each year. Coverage starts on January 1 and ends on December 31 of each year. All plan members begin in the initial coverage phase. Depending on your drug costs, you may advance to the coverage gap phase (sometimes called the “doughnut hole”) and then the catastrophic coverage phase. Below is an overview of the three phases. Read on to find out what you pay in each phase.

Phase One: Initial Coverage

Peoples Health covers generic drugs, preferred brand-name drugs, non-preferred brand-name drugs and specialty drugs during the initial coverage phase.

For up to a 30-day supply, Peoples Health Choices 65 (HMO) members pay:

• $5 for generic drugs
• $35 for preferred brand-name drugs
• $55 for non-preferred brand-name drugs
• 20 percent coinsurance for specialty drugs

If your total drug costs – the amount Peoples Health pays combined with your out-of-pocket costs for Medicare Part D drugs – reach $2,930, you will move into phase two, the coverage gap.

Phase Two: Coverage Gap

Peoples Health covers generic drugs and provides some coverage for preferred brand-name drugs in the coverage gap. We do not cover non-preferred brand-name drugs or specialty drugs in the coverage gap.

For up to a 30-day supply, Peoples Health Choices 65 (HMO) members pay:

• $5 for generic drugs
• 60 percent of the cost for preferred brand-name drugs*
• 100 percent of the cost for non-preferred brand-name drugs and specialty drugs*

*Members receive a 50 percent discount on most of these drugs through the Medicare Coverage Gap Discount Program.

The coverage gap ends when your out-of-pocket costs for Medicare Part D drugs reach $4,700. Your out-of-pocket drug costs include the copays/coinsurance you have paid for drugs since the beginning of the year. It also includes the amount drug manufactures pay for brand-name drugs in the coverage gap as part of the Medicare Coverage Gap Discount Program. If that happens, you will move into phase three, the catastrophic coverage phase.

Note: Peoples Health covers some drugs that Medicare does not cover as an enhanced benefit to you. However, only drugs covered under Medicare Part D count toward your out-of-pocket drug costs. Section 2 of the Medicare Part D Explanation of Benefits you receive in the mail each month tells your year-to-date total drug costs.

Phase Three: Catastrophic Coverage Stage

Peoples Health pays most of the drug costs and members pay reduced copays and coinsurance during the catastrophic coverage phase.

For up to a 30-day supply, Peoples Health Choices 65 members pay the greater of:

• 5 percent coinsurance
  OR
• $2.60 for generic drugs or drugs that are treated like generics
• $6.50 for all other drugs

If you enter the catastrophic coverage phase, you will stay in it through December 31, 2012. You will start the new cycle of prescription drug coverage on January 1, 2013. You will start in phase one, the initial coverage stage.