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Health Care Reform:

Health Insurance & Affordable Care Act

What Does Medicare Cost?

Medicare Part D continued...

After you've paid the deductible, your Medicare prescription drug plan kicks in and you pay a copay or coinsurance.

Copay costs: The part you pay for your medicines is either called a copay or coinsurance. The amount depends on the plan you've chosen. You may pay more for some drugs than others, such as brand-name drugs.

Costs in the doughnut hole: If you spend a certain amount on medicines, you'll have a gap in your drug coverage, which is often called the doughnut hole. 

While in the doughnut hole, in 2013 you pay 47.5% of the cost for a brand-name medicine. This will steadily decrease to 25% in 2020. After 2020, the doughnut hole will disappear.

For generic medicine, you pay 79% of the cost in 2013. This will steadily decrease to 25% in 2020. After 2020, the doughnut hole will disappear.

 

 

You’ll Pay This Percentage for Brand-Name Drugs
in the Doughnut Hole
You’ll Pay this Percentage for Generic Drugs
in the Doughnut Hole

2013

47.5%

79%

2014

47.5%

72%

2015

45%

65%

2016

45%

58%

2017

40%

51%

2018

35%

44%

2019

30%

37%

2020

25%

25%

 

After the total cost of your drugs (what you and your health plan paid combined) reaches a certain level, Medicare stops paying for them. In 2013, that level is $2,970. For 2014, it will be $2,850.

Although you have to start paying your drug costs on your own, you receive a 52.5% discount for covered brand-name drugs. That  means you pay 47.5% of the drug's cost. Prescription drug plans will pay 21% of the cost of covered generic drugs . That means you pay 79% of the cost of generic drugs that are covered by Medicare.

You have to pay for your medicines yourself until you reach an out-of-pocket threshold, which is also called a maximum spending limit. In 2013, that limit, which is also called your out-of-pocket threshold, is $4,750. For 2014, it will be $4,550.

On the plus side, the entire cost of a brand-name drug is added to the maximum spending limit. That's a bonus because you only pay about half the cost of a brand-name drug, but you get "credit" for the whole amount. That means you'll reach the maximum more quickly, when Medicare will start sharing the costs with you again.

Your deductible, the full cost of brand-name drugs, plus the amount you spend on generic drugs also count toward that $4,750 limit. But your monthly premiums do not. Keep in mind, if you don't use expensive drugs, you won't need to spend $4,750.

Costs after the doughnut hole: When Medicare starts paying again, it's called catastrophic coverage.  Then, you only have to pay a small copay or coinsurance toward your prescription drug costs for the rest of the year. In 2013, for generic medicines, you'll pay 5% of the drug's cost or $2.65, whichever is higher. For brand-name drugs, you'll pay 5% of the drug's cost or $6.60, whichever is higher. In 2014, you'll pay $2.55 for generics and $6.35 for brand-name or 5% of the drug's cost, whichever is higher.

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