Retirees with high prescription drug costs might want to keep an eye on President Trump’s hoped-for changes to Medicare.
“If those discounts are no longer counted, it means people would spend longer in the coverage gap and spend more out of pocket,” said Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League. “Those discounts currently are 70 percent of the cost of a drug.”
Medicare Part D’s coverage gap, or “donut hole,” is the time between a drug plan’s coverage limit ($3,820 for 2019) and the threshold for qualifying for catastrophic coverage ($5,100 for 2019), which is when your share of the cost drops.
While Medicare beneficiaries now pay 25 percent for brand-name drugs during that gap — the same share before reaching the drug plan’s limit — they also have been able to count manufacturer discounts toward their out-of-pocket costs while in the gap. That helps them reach the catastrophic phase of coverage faster.
Some retirees with lower income get extra help to cover the cost of their medicine. Others, however, have too much income to qualify for assistance but nevertheless struggle to pay the cost of their prescriptions — which can lead to drastic choices.
“They start cutting tablets in half to stretch out their medicine, or use credit cards to pay,” said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans. “For some, it’s a choice of taking medicine or buying food.”
Adding to the potential woes for those already struggling is the impending expiration at the end of 2019 of an Affordable Care Act provision that limited annual increases in the threshold for catastrophic coverage. Over the past nine years, yearly increases have totaled $550 altogether.
In 2020, however, the threshold is projected to jump by $1,250 to $6,350 from $5,100 this year, according to the 2018 Medicare trustees report. Beyond that, the increase is expected to average $450 each year through 2027, at which point the out-of-pocket threshold would hit $9,450.
“That’s a huge amount of money for future retirees or people retiring today who will be paying that much more,” Johnson said.