Dollars to donut holes

When I was young, my father would often say, “I'll bet you dollars to donuts...” and then make some wild pronouncement about what was happening in the news. I was thinking about that the other day when I realized two things. One, that I'm not entirely sure what my dad's expression was supposed to mean. I suspect it had something to do with the price disparity between a dollar, and a donut. But now that dollars and donuts are becoming ever closer in value – the meaning may be reversed in the not-too-distant future.

The second thing that came to mind was the fact that many older American's are becoming increasingly focused on...not donuts, but the donut hole. More specifically, how the new health care bill passed by Congress and signed into law by the President, might affect their prescription drug benefits – both now, and in the future.

That's an entirely reasonable concern. So it seems reasonable to touch on the subject, at least momentarily, and in a somewhat generic manner.

The term, “donut hole” refers to a prescription drug benefit, or lack of benefit, that affects many American's who are covered under Medicare Part D. And to those who are affected, this is a serious issue. In fact, there almost 50,000 residents in Connecticut who fell into the so-called donut hole in 2009. So we're not talking about small potatoes, here. The benefits are important, and the dollars being spent are considerable.

In short, if your total drug costs were more than $2,830 for the calendar year, 2010 – you are in the donut hole. The gap in coverage means that you will be required to pay the full price for your pharmaceuticals, until the cost rises high enough for you to qualify for catastrophic coverage. This year that threshold has been set at $4,550.

The difference, for those who do not have a calculator handy, is $1,720.00

The total cost of your prescription drugs is tallied up as the total of what you paid, as well as what your plan paid out, over the course of the year.

The effort to close the donut hole is incremental. Each year the hole is scheduled to get smaller and smaller, until it completely disappears by 2020.

This year the hole closes just a small amount, with a check for a $250 rebate being issued to each Medicate Part D recipient who was impacted. Next year, the plan is scheduled to offer donut hole dwellers a significant discount on name brand prescription drugs (50 percent) and a somewhat smaller discount for generics, which are less expensive to begin with.

So there is a light at the end of the tunnel. The donut hole is getting smaller. Nine years from now, it should be gone completely. I hope that offers some encouragement to those who are stuck in it for the moment.

Have a wonderful Thanksgiving. For all our trials and tribulations, we are still fortunate whenever we get to enjoy the opportunity to spend time with our family and friends.