For many older Americans, fall is a bitter time of year associated with a deceptively sweet name: the "doughnut hole."
Far from a sugary treat, it's a coverage gap in the Medicare Part D drug program. When Part D was first implemented in 2004 to help elderly patients pay for their prescription drugs, the government imposed a yearly limit on how much it was willing to shell out. Seniors are covered right up until they hit the threshold, which is $2,510 in 2008. From that point until the end of the year, they pay fully out of pocket.
The doughnut hole has always been a source of dread for the elderly. But now, with the financial crisis decimating 401(k)s and other retirement plans, many cash-strapped seniors are simply doing without some of their meds. Larry Kay of Yucaipa, CA hit the hole in May and is now paying $650 a month for drugs to treat his high cholesterol and a lung condition called chronic obstructive pulmonary disease, or COPD. He has stopped using his COPD inhaler in the morning, even though he's not supposed to skip doses. "If my doctor knew, he'd be very upset," he says.
The doughnut hole continues to exacerbate financial burdens on seniors. On September 26, health-care advisory firm Avalere Health released a report predicting Part D beneficiaries who joined the 10 most popular Medicare plans would see their premiums rise by 30%.
Source: BusinessWeek, October 27, 2008