June 8, 2010 -- Senior citizens with high drug costs will soon get a bit of help from the government.
Medicare beneficiaries who fall in the program's "doughnut hole" for prescription drug coverage are set to receive $250 checks from Washington as part of the new health reform law. President Barack Obama touted the checks today during a health care event with seniors in Maryland.
"Each month, as more seniors hit the doughnut hole, more and more checks will hit the mail," the president told a town hall meeting in Wheaton, Md.
In most cases, Medicare's Part D prescription drug benefit covers 75% of drug costs up to $2,830. After that, seniors must pay all of their own drug costs until total spending reaches $6,440 in a year. That $3,610 gap in coverage is knows as Part D's "doughnut hole."
The checks don't close the doughnut hole. Instead, any senior who enters the coverage gap with automatically get a check in the mail.
"It is not something that is really going to reduce the doughnut hole much for them," says Cheryl Matheis, senior vice president for health strategy at AARP. Instead, Matheis calls it a "symbolic and real gesture" to show seniors that Part D's coverage gap is closing.
Under the new health reform law, name-brand drugs will be discounted by 50%, and generics by 7%, for seniors in the doughnut hole. The coverage gap is scheduled to close entirely by 2020, under a schedule laid out in the bill.
Conservatives attacked the payments as a taxpayer-funded buyoff of seniors. They point to $500 billion in cuts in the Medicare Advantage managed care plan used by 10 million seniors.
"Today's event is high-powered Presidential showmanship for entitlement politics," Bob Moffit, a health policy expert for the Heritage Foundation, wrote on his blog Tuesday.
Sen. Mitch McConnell, the Senate minority leader, said the Obama administration was "trying to make something that's immensely unpopular, popular."
Still, checks are on the way for an estimated 4 million seniors with high drug costs. The AARP said the checks would be sent automatically via mail four to six weeks after a beneficiary's costs enter the doughnut hole.
The group warned of potential scams involving individuals offering to secure the payments for a fee or asking for a Social Security number or bank account to obtain the money.
"The individual doesn't actually have to apply for this. It will be sent to [him or her] directly," says David Certner, AARP's legislative counsel. "You will not be asked for any information for this or any other reason by a government agency."