Medicare Part D Coverage Gap Closes In 2019

Medicare Part D Coverage Gap Closes In 2019

While little progress was made this year to lower overall drug costs, some changes made by the Bipartisan Budget Act (BBA) of 2018 are helping an estimated 5 million Medicare beneficiaries with the highest annual out-of-pocket drug costs.  Provisions of the BBA reduced Part D enrollees’ out-of-pocket co-insurance for brand-name drugs in the “doughnut hole” which is also called the coverage gap phase of coverage.

In 2018, people who hit the Part D coverage gap pay a co-insurance of 35% for discounted brand-name drugs and 44% of the cost of generics.  That will decline to 25% for brand name drugs and 37% for generics in 2019, a year sooner than scheduled under previous legislation.

In 2018, once drug plan enrollees enter the coverage gap phase, they remain there until they spend a total of $5,000 out-of-pocket.  This out-of-pocket threshold is calculated entirely on drugs covered by the enrollee’s drug plan formulary.  If a drug isn’t on the plan formulary, beneficiaries must pay 100% of the cost of drugs and those out-of-pocket costs do not count toward the out-of-pocket threshold for catastrophic coverage.

In 2019, that out-of-pocket threshold will increase to $5,100.  Once that threshold is reached, the catastrophic phase of coverage begins, when beneficiaries pay 5% co-insurance, or $3.40 for generics and $8.50 for brand name drugs, whichever is greater.

The lower co-insurance in 2019, however, comes as the annual out-of-pocket threshold, the amount beneficiaries must spend before the coverage gap ends and catastrophic phase begins, is projected to take a stunning leap.  The threshold is scheduled to increase by $1,250 in 2020, from $5,100 to $6,350.  In fact, the catastrophic threshold is forecast to almost double over the next 9 years rising from $5,000 in 2018 to $9,450 in 2027.

According to TSCL’s 2018 Senior Survey, 62% of survey participants support capping out-of-pocket spending on prescription drugs.  Only 8% are opposed to the idea.

TSCL supports legislation that would eliminate beneficiary cost - sharing in excess of the Medicare prescription benefit's annual out-of-pocket threshold.  In addition, TSCL supports legislation to allow Medicare to negotiate drug prices to benefit all beneficiaries.


Sources:  Medicare Trustees 2018 Annual Report, June 5, 2018.  Fact sheet: “Medicare Part D Prescription Drug Benefit in 2019,” National Council on Aging, 2018.