How To Avoid The Medicare Donut Hole

Anyone who has Medicare and takes lots of drugs or a few very expensive ones (or who has an older relative who does) knows about the dreaded “donut hole”—the gap in coverage that happens each year if you have to spend a lot of money on prescriptions. If you’re above the poverty level but don’t have good gap insurance, it can be financially devastating. The New York Times notes that for a quarter of at-risk patients, planning ahead with generics may help you skirt the donut hole altogether. The big stumbling block is that you have to be prepared to discuss your personal finances with your doctor.

When patients hit the donut hole, all sorts of bad things can happen. First, switching to generics introduces the risk of new or worse side effects. But some patients—according to a recent AARP study, about 15%—stop taking their prescriptions altogether, or else they rack up huge credit card debts to continue paying for the drugs.

Sometimes a patient can score free samples of the drugs he’s taking, but unfortunately the value of these “free” drugs won’t count toward his annual overall expenditure, so the patient remains stuck in the donut hole, and has to start paying against it again once the Free Drug Train leaves the station.

The New York Times quotes one study that says 23% of patients could avoid the donut hole if they started with generics at the beginning of the year. But to do this, you have to talk to your doctor about your personal financial situation, which can be difficult. One study found that

four of five [patients] wanted doctors to discuss medication costs, but fewer than one in five doctors did. One in three patients in the study who cut back on their drugs because of cost said they had never asked their doctor for help in reducing expenses.

“Usually I’m a little blind to it if they’re in the doughnut hole,” Dr. Epperly said, “mainly because they’re proud people, and they feel their obligation isn’t to share that with the doctor.”

Otherwise, the Times suggests that patients visit the Medicare plan comparison service to see if there’s a plan that meets their needs. However, for patients who can “rely solely on generic drugs,

the cheapest approach in the short run might be to forgo Part D insurance altogether. Instead, they could simply shop at discount retailers like Wal-Mart, Costco and Target whose pharmacies offer low-cost generics for as little as $4 for a monthly prescription.

We’re not sure what they mean by “in the short run”—that sounds a little ominous when you’re giving advice to seniors—but if it keeps you out of the donut hole, go for it.

“Strategies to Avoid Medicare’s Big Hole” [New York Times]
“There Are Alternatives: Insuring to Bridge the Gap or Opting Out” [New York Times]

“Find & Compare Plans that Cover Drugs” [Medicare]
“Seniors in Part D donut hole unlikely to have gap coverage” [Managed Healthcare Executive]
“5 Ways to Lower Your Costs During the Coverage Gap” [Medicare]
(Photo: Getty)


Edit Your Comment

  1. RvLeshrac says:

    The cheapest approach is to provide proper medical care with regulated costs in the first place.

    Many of these people will eventually become wards of the state, which is going to cost far more than taking care of them before that happens.

  2. humphrmi says:

    When we were putting our kids in state licensed day care, our providers (private, in-home) were required by state law to discuss with us the options of providing income verification for state grants and food allowance. If we did, and qualified, we got a reduced rate. In my case, I knew the state thresholds and that we were well above them, so I opted not to share my financial data since I knew I wouldn’t qualify.

    Our day care provider didn’t (A) assume that we could afford her care without it, and (B) didn’t ask us to provide financial data, but she did at least follow a scripted procedure for finding out if we wanted to provide it.

    My point is that doctors shouldn’t just assume that if you don’t share financial data with them, you don’t need help. There are legal, sensitive ways to ask “Do we need to talk about the financial impact of the ‘donut hole’?”

    I hate to put this off on them as they already have their hands full with managed care and other cost pressures, but I think doctors should take a more active role in this process, and not just keep quiet and assume that all is well if the patient hasn’t asked to talk about it first.

  3. SteveBMD says:

    @humphrmi: As a doctor, I have to agree with you. I was trained as a psychiatrist in a large private hospital at a well-known research institution, where my colleagues freely prescribed the latest and most expensive psych meds (because they were the ones we were reading about and– yes– the ones that the drug reps were pushing) when older meds and generics were/are just as good. Now my colleagues are out in private practice (and, for the most part, not taking insurance), and you can bet they’re not talking about affordability of care with their patients. Whether the patient “can pay for it” or not, I think it’s vital to provide the best care at the most reasonable cost, and in most cases, there are more affordable alternatives. Furthermore, I think cost should be part of the discussion from the start, because it affects patient compliance and, ultimately, clinical outcomes.

  4. RvLeshrac says:

    It shouldn’t have to be said, but your physician should be giving you the best, lowest-cost option all the time – not simply because you’re poor.

    In the US, of course, whether or not the patient can pay for it seems to be irrelevant. Most of the doctors I’ve had to put up with seem more interested in buying another luxury car or a larger house than in getting me care that I can afford.

    And, of course, if you can’t afford the care they’re offering, they don’t seem to give a damn about you. The reason our emergency rooms are filled with people who shouldn’t be there is because they *know* they can get treated there, regardless of whether or not they can pay.

  5. Hambriq says:

    @RvLeshrac: It shouldn’t have to be said, but your physician should be giving you the best, lowest-cost option all the time – not simply because you’re poor.

    Eh. Rather, I think the doctor should give you the best option for the price you are willing to pay. In 9 cases out of 10, the newer drugs are unequivocally better. But it’s a question of cost versus benefit. Something that’s 20% better probably costs 300% more.

    In that respect, I don’t fault the doctors for prescribing the best possible medicine It just brings up an interesting ethical dilemma. How do you justify giving a patient something other than the best possible care available? Personally, I can think of a lot of reasons.

    But try explaining those reasons to a patient who only wants the best. When they can’t afford it. It’s a problem on both ends of the spectrum. Doctors need to have a greater knowledge of how much the medicines they are prescribing cost. Patients need to be better informed about the ramifications of their medical decisions.

    I doubt that we will make much headway as long as the majority of people keep their heads pleasantly buried in the sand.

  6. bohemian says:

    Maybe just negotiating costs for those on Medicare and providing drug coverage directly through Medicare would have solved this.

  7. Hambriq says:

    @bohemian: providing drug coverage directly through Medicare would have solved this.

    Why should our tax money be wasted on this when we already have an existing infrastructure in place to deliver said coverage?

    Changing who is dispensing the service isn’t going to fix the problem; very few people, patients or doctors, have a keen grasp of just how much prescriptions cost.

  8. Bobg says:

    My prescriptions were costing $1007 a month. I raised hell with my doctor and I am now taking generics for $0 (no co-pay.) I printed out the list of generics that WalMart offers and took it to my doctor and told him to pick the drugs he wanted me to take from that list. On a side note-one of the generics was prescribed at 80mg. The WalMart pharmacist told me that the 40mg dose was generic but the 80mg dose was $326 for 30 pills. I know, I can’t make any sense of that either.

    I have outlined my experiences with the drugs I was taking in my blog:


  9. ideagirl says:

    In my area, doctors won’t prescribe generics, period. Most don’t even know what those name brand drugs cost without insurance, and when told, they are shocked. Doctors here are very out of touch with reality, and unsympathetic to the cost of prescriptions.

  10. DrGirlfriend says:

    @SteveBMD: I left my last dentist because of something similar to what you describe. All of her suggestions for treating my dental issues involved expensive procedures which, yes, would probably have worked wonders, but were nto within my budget. She never recommended any other alternatives, even when I broke down crying in her office one day when I was given a run-down of how much my treatment would cost me out of pocket and was told it was my only option. And, oh yeah, they’d need half of it up front. (I’m not generally an in-public cryer, but damn, that was stressful.) I went to another dentist who was able to do treat me at a fraction of the cost, and very well.

    My question about the articule is this: it says that in order to get generics, you need to discuss your finances with your doctor. In my experience (granted, I’m not on Medicare), this has never been the case. He prescribes a name brand, I ask if we can go generic, he usually says yes, and off I go with my Rx. Why would a discussion about personal finances be necessary?

  11. @DrGirlfriend: I have left several dentist as soon as they started that BS… especially when all the sudden “cosmetic dentistry” goes up on their sign or business cards.

    I usually ask the pharmacist if there are generics available.

    Health Care in the United States is a joke.

  12. RvLeshrac says:


    You can ask the pharmacist, but *ALWAYS* ask the doctor. Generics are largely identical to their name-brand counterparts, but there may be other issues to consider.

  13. thecookiemaker says:

    The meaning behind the “short run” is that Medicare enforces a penalty for those who do not have a part D plan. For each month that you are eligible for a plan and do not have one, you will receive a penalty of 1% of the average standard premium for part D plans. This penalty is then added to your premium when you finally do enroll in a plan. at the moment the premium increase for going without a plan for a whole year is $1.90 per month.