48,000 Beneficiaries Have Used Medicare’s Drug Discounts in 2011

48,000 Beneficiaries Have Used Medicare’s Drug Discounts in 2011

The health care law’s discount on brand-name drugs for some Medicare beneficiaries has been used by 48,000 people who saved a combined $38 million (an average of $800 per person) through the first 2 months of this year, according to the Department of Health and Human Services (HHS).

New HHS figures released in March also show that the 11,000 Medicare enrollees who have already hit the Medicare prescription drug benefit’s annual out-of-pocket maximum this year have saved $1,175 on average as a result of the health law. The number of Medicare beneficiaries who buy discounted drugs is expected to increase throughout the year.

People who opt for the Medicare Part D drug insurance program pay a portion of their prescription bills until they’ve spent a total of $2,840 in drug costs and deductibles. That’s when they hit the coverage gap, also known as the donut hole. At that point, they must pay all the drug costs until they have spent a total of $4,550 out-of-pocket for the year. Then they reach catastrophic coverage, where they pay the greater of 5% of their drug costs or a copayment of $2.50 for generics, $6.30 for brand name drugs. See our Prescription Drugs section for more info.

Starting in January of this year, Medicare beneficiaries hitting the donut hole receive a 50% discount on brand-name drugs and 7% discount on generic drugs to help offset the cost of prescriptions. Even when getting the 50% discount, the full price of the drug counts toward reaching the $4,550 limit to get out of the donut hole and into catastrophic coverage.

The law closes the doughnut hole by 2020. For more information on the changes in Part D prescription drug coverage prompted by the health reform law, see our article, “50% Discount on Part D Brand Name Drugs Starts Jan 1st.”

This article is edited in part from a Kaiser Health News article, 3/22/11.

Karen Fletcher
Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.