New Medicare Prescription Savings 50% Off Cost for Brand Name Drugs while in the “Donut Hole”or Gap

Who can get the new savings while in the coverage gap?

Starting in 2011, you can get the new savings if all of the following are true:

  • You're currently enrolled in a Medicare Prescription Drug Plan (including employer group health and waiver plans) or a edicare Advantage Plan that includes prescription drug coverage.
  • You don't get Extra Help (a Medicare program to help people with limited income and resources pay Medicare prescription drug costs).
  • You have reached the coverage gap.

How does the 50% coverage gap discount work for brand-name drugs?

Companies that make brand-name prescription drugs must sign agreements with Medicare to participate in the Medicare Coverage Gap Discount Program. This program requires the companies to offer discounts on brand-name drugs to people who have reached the coverage gap. Starting in 2011, once you've reached the coverage gap, you will automatically get a 50% discount on your brand-name prescription drugs at the time you buy them. This discount applies if you buy your prescriptions at a pharmacy or order them through the mail. The discount will come off of the price that your plan has set with the pharmacy for that specific drug. With this discount, you will only pay 50% of the price for the brand-name drug, but, the entire price (including the 50% discount the drug company pays) will count toward the amount you need to qualify for catastrophic coverage. Once you reach catastrophic coverage, you only pay a small coinsurance or copayment for the rest of the year. Your EOB notice will show any discounts paid by the drug companies.


hands holding pills

Meg McAlpine
Contributing Editor