Prescription Drug Coverage

In 2006, after hearings and debate and more hearings, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) became law. Prior to this time people on Medicare used a hodge-podge of solutions to purchase their prescription drugs. These included but were not limited to retiree plans, private insurance, and self-pay plans.

MMA standardized Medicare Prescription Drug Coverage under Medicare oversight and created a new marketplace for offering drug coverage to Medicare beneficiaries. While there have been adjustments to these plans over the years, the basics have remained the same.

Each plan has a deductible period ($480.00 for 2022), an initial coverage period (prior to coverage gap), coverage gap (donut hole), and catastrophic coverage. After your deductible period, you will be in the initial coverage period until you AND the plan have spent a certain amount ($4430 for 2022) then you will enter the coverage gap (donut hole). When you are in the coverage gap you will pay different co-pays than you paid when you were in the initial coverage period. You will continue to pay these co-pays until you exit the coverage gap by reaching a certain amount ($6550 for 2022), you will then be in catastrophic coverage for the remainder of the calendar year. Some people that enter the gap do not exit until the end of the year.