Medicare

President’s Budget Looks to End Drug-Cost Help

If you have high prescription drug costs you may want to keep an eye on President Trump’s proposed changes to Medicare as it looks to put an end to drug-cost help.

The president’s 2020 budget request, released Monday, calls for allowing Medicare to negotiate lower prices with pharmaceutical companies and would cap how much you pay out-of-pocket under Part D prescription drug coverage, among other provisions. However, it would also get rid of some help that you’re receive for your medicines.

On top of eliminating help with generic drug costs for low-income Medicare recipients, the budget would stop allowing manufacturer discounts to count toward your out-of-pocket costs during the so-called coverage gap under Part D.

If those discounts are no longer counted, it means you will spend longer in the coverage gap and spend more out of pocket. These discounts currently are 70 percent of the cost of a drug.

As you know, Part D’s coverage gap, or “donut hole,” is the time between a drug plan’s coverage limit ($3,820 for 2019) and the threshold for qualifying for catastrophic coverage ($5,100 for 2019), which is when your share of the cost drops.

While you now pay 25 percent for brand-name drugs during that gap you have also been able to count manufacturer discounts toward your out-of-pocket costs while in the gap, helping you reach the catastrophic phase of coverage faster.

Adding to the potential worries for those already struggling is the impending expiration at the end of 2019 of an Affordable Care Act provision that limited annual increases in the threshold for catastrophic coverage.

In 2020 the threshold is projected to jump by $1,250 to $6,350 from the current $5,100 this year, according to the 2018 Medicare trustees report.

Beyond that, the increase is expected to average $450 each year through 2027, at which point the out-of-pocket threshold would hit $9,450!

That’s a huge amount of money for future retirees or those retiring today who will be paying that much more.