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Medicare Coverage Gap
What is the Donut Hole?

The Part D Medicare Prescription drug program is made up of three phases. Each phase depends on a combination of what you pay out-of-pocket for your drugs, or a combination of what the insurance company, drug manufacturer, and amount you pay. It is important to understand this coverage gap (donut hole) because you pay most of your drug costs during this time. Note: Some plans may have a Part D deductible. If you have an annual deductible, you will pay the full cost of your Part D drugs until your plan deductible is met and you enter Phase1.

These amounts may change on January 1 of each year. This chart reflects dollar amounts for 2013.

Phase 1
Initial Coverage
Phase 2
Coverage Gap
Phase 3
Catastrophic Coverage
YOU PAY: Copayment or Coinsurance

Excellus BlueCross BlueShield PAYS: Remaining Cost
YOU PAY: Full cost except as noted below

Excellus BlueCross BlueShield PAYS: Partial cost
YOU PAY: 5% coinsurance or
$2.65 (generic) or $6.60 (all other
medications), whichever is greater

Excellus BlueCross BlueShield PAYS: Remaining cost
  • When you are in this phase 1, Initial Coverage, you simply pay your copay or coinsurance for your covered medication. Excellus BlueCross BlueShield pays the rest of your medication costs.
  • You generally stay in this payment phase until the amount of your year-to-date total drug costs (what you pay plus what Excellus BlueCross BlueShield pays) reaches $2,970.
  • You will then enter what is called the "Coverage Gap."

When you are in the Coverage Gap, you pay the full cost of your medications, except as noted below:

  • You will pay 79 percent of the cost for all your covered generic medications. The 21 percent savings you receive for Generics does not count towards your true out-of-pocket costs.
  • You will pay only 47.5 percent at the pharmacy for your covered brand-name medications. The total cost of the medication (before the discount) applies toward your true out-of-pocket costs.
  • You generally stay in this phase until your true out-of-pocket costs reach $4,750. You will then enter the Catastrophic Coverage Phase.
  • When you are in this phase 3, Catastrophic Coverage, you pay the greater of either 5 percent coinsurance or $2.65 generic; $6.60 for all other medications. Excellus BlueCross BlueShield pays most of the cost for your covered medications.
  • Once you are in this payment stage, you stay in it for the rest of the calendar year (through December 31).
How can you avoid reaching the donut hole?
Using generic medicines is the easiest way to avoid reaching the coverage gap. Generics have the lowest copay. Talk to your doctor and/or your pharmacist about using generics.
Excellus BlueCross BlueShield contracts with the federal government and is an HMO plan and PPO plan with a Medicare contract. Enrollment in Excellus BlueCross BlueShield depends on contract renewal. Submit a complaint about your Medicare plan at www.Medicare.gov or learn about filing a complaint by contacting the Medicare Ombudsman. .
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