How does the Medicare Part D doughnut hole work, and is it still shrinking in 2015? --H.M., Tampa
The so-called doughnut hole is the gap in the middle of Medicare Part D prescription-drug coverage that requires you to pay most of the cost of your drugs until you reach the catastrophic-coverage level.
For 2015, after you pay a $320 deductible, your Part D plan provides coverage until your drug expenses reach $2,960 (including both your share and the insurer’s share of the costs). Then you land in the doughnut hole and pay most of the cost of your prescriptions out of pocket—although you get a 50% discount on brand-name drugs from the drug company and your plan pays another 5%; you also get a 35% federal subsidy for generic drugs. When your out-of-pocket costs reach $4,700, your plan pays 95% of your covered drug costs.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Even though the pharmacy applies the discount in the doughnut hole automatically, both the 45% you pay and the 50% discount the drug company pays for brand-name drugs (but not the 5% paid by your plan) count toward your out-of-pocket costs. For generics, only the 65% you pay counts toward your out-of-pocket costs.
The gap will continue to shrink until 2020, when the discount for both brand-name and generic drugs rises to 75%.
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
Getting Out of an RMD Penalty
retirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
