May 28, 2010 in Nation/World

Medicare ‘doughnut’ help coming

Noam N. Levey Tribune Washington bureau
 
Associated Press photo

Health and Human Services Secretary Kathleen Sebelius, right, joined by House Speaker Nancy Pelosi, D-Calif., speaks about benefits and questions about the Affordable Care Act and Medicare, during a news conference on Capitol Hill in Washington.
(Full-size photo)

WASHINGTON – Senior citizens who hit the so-called “doughnut hole” in Medicare’s drug benefit will begin getting $250 rebate checks in two weeks, the Obama administration announced Thursday, providing one of the first tangible benefits of the recently enacted health care law.

The rebates, designed in part to bolster support for the still controversial new law, are the first step in a decade-long phase-out of the unpopular gap in Medicare Part D drug coverage.

Seniors now enrolled in a Medicare Part D plan pay 25 percent of the cost of their prescription drugs until the total bill reaches $2,830. At that point, enrollees must pay the full cost of their prescriptions until their total out-of-pocket spending reaches $4,550. Catastrophic coverage then kicks in and enrollees pay 5 percent of drug costs for the rest of the year.

Department of Health and Human Services officials said Thursday that the first 80,000 seniors who hit that coverage gap, or “doughnut hole,” will be sent checks June 10, five days ahead of a deadline included in the legislation.

Checks will then go out on a monthly basis until the end of the year as more seniors fall into the gap. Secretary of Health and Human Services Kathleen Sebelius said Thursday that the department estimates that slightly more than 4 million seniors will ultimately get rebates.

“Seniors do not have to do anything to get this check. They don’t have to sign anything. They don’t have to apply for it,” Sebelius said, warning recipients not to be fooled by scam artists seeking personal information by claiming it is necessary to process rebates.

Starting in 2011, the rebate will be replaced by a discount. Seniors will qualify for a 50 percent discount on drugs in the doughnut hole. That will be gradually phased up to a 75 percent discount in 2020, effectively eliminating the coverage gap.

The announcement Thursday comes as the Obama administration works to highlight benefits of the new health care law in the face of persistent public wariness of the health care overhaul.

Since President Barack Obama signed the law in March, administration officials have secured commitments from insurance companies to immediately begin offering parents who buy their own insurance the option of including their adult children under 26. Employers who provide coverage could also make the option available now if they chose to, though it does not become mandatory until after September.

The administration is also working with states to create new high-risk pools this summer to allow people who have been denied coverage for a pre-existing medical condition to get insurance, although there are questions about whether there is enough money to do this.

The new health care law’s biggest changes – including the creation of new regulated insurance markets, the new requirement to get insurance and the ban on insurance companies denying coverage to sick people – do not go into effect until 2014.

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