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Medicare drug benefit leaves many with high out-of-pocket costs

Written by Diane Archer

The Kaiser Family Foundation just released a report documenting the high out-of-pocket costs for many people with the Medicare Part D drug benefit. Without an out-of-pocket cap, the Medicare drug benefit leaves people with costly prescription drug needs choosing between paying thousands of dollars for their medicines or foregoing treatment.

In 2017, before Part D drug coverage kicks in, people pay a $400 deductible. After they meet their deductible, they must pay 25 percent coinsurance, up to a coverage limit of $3,700 in total drug costs. They then fall into a coverage gap (donut hole) where they must pay a bigger portion of their drug costs until these costs total $4,950, the catastrophic coverage limit. After they reach the catastrophic coverage limit, if they still need drugs, they are responsible for 5 percent of their drug costs. People with low incomes may receive subsidies that help cover the Part D premiums and cost sharing, bringing down their out-of-pocket costs.

More than 3 million people had drug costs above the catastrophic coverage limit. Of those, one million did not qualify for subsidies. All in, with the Part D drug benefit, these people spent an average of more than $3,000 out of pocket on their medications.

The Kaiser report reveals that about half the people enrolled in Medicare Part D spent over $2,924 on their medicines in 2015. About one in ten spent $5,200 or more out of pocket for their prescription drugs. People with HIV/AIDS, multiple sclerosis, viral hepatitis, leukemia/lymphoma, and schizophrenia incurred the highest out-of-pocket drug costs.

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