This article was last updated on July 5
[Update] The government is starting to mail out the tax free $250 medicare gap checks to seniors who fall into the program’s gap in prescription drug coverage. This so called Medicare “doughnut hole,” payment (detailed below) was part of the recently enacted Health care reform bill. If you have Medicare prescription drug coverage, and aren’t already getting Medicare Extra Help, Medicare will automatically send you a one-time $250 rebate check after you reach the coverage gap. The Explanation of Benefits notice, which your drug plan mails to you each month when you fill a prescription, will tell you how much you’ve spent on covered drugs and whether you’ve entered the coverage gap.
The first checks will be sent June 10, three weeks earlier than scheduled, to about 80,000 people. The Centers for Medicare and Medicaid Services said checks will be mailed monthly throughout the year as Medicare beneficiaries hit the donut hole. Beneficiaries can expect to receive their check within 45 days after that. The Department of Health and Human Services estimates that about 4 million seniors will get the rebates in 2010.
The CMS also warned of potential scams, noting that qualifying seniors will receive their checks automatically and are not required to fill out any forms. You don’t need to provide any personal information like your Medicare, Social Security, or bank account numbers to get the rebate check. Don’t give your personal information to anyone who calls you about the $250 rebate check. Call 1-800-MEDICARE (1‑800-633-4227) to report anyone who does this. You can also call this number if you have not recieved your expected check.
This rebate is the first step toward closing the Medicare prescription drug coverage gap. Starting in 2011, seniors who fall into the donut hole will receive a 50% discount on brand-name drugs. The discount for generic drugs will be 7%. Those figures will rise over the years, eventually reaching a total 75% discount that effectively will eliminate the gap in 2020.
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Even though President Obama’s $250 Social Security rebate in 2010 (to offset the lack of a COLA increase) was quashed by Congress for now, he has been able to get a $250 payment to seniors on Medicare through the recently enacted Health care reform bill.
The $250 payment to offset the Medicare drug coverage gap – known as “doughnut hole” – a big, expensive gap in coverage that affects millions is among the first to be addressed under the new health care law and while in effect immediately, it will take a few months for the rebate to be paid. The coverage gap or doughnut hole, refers to the lack of Medicare coverage for out-of-pocket drug costs between $896.25 and $4,350.25. Medicare covers 75% of costs less than $896.25 and 95% of costs over $4,350.25. In 2011, Medicare eligible participants would also receive a 50% discount on brand name (non-generic) drugs.
Other Medicare aspects of the health care reform will take 4 or more years to implement, and includes the gradual closing of the dreaded “doughnut hole” prescription coverage gap, improved preventive care and puts a new emphasis on trying to keep seniors struggling with chronic diseases in better overall health. But it also cuts funding for popular private insurance plans offered through the Medicare Advantage program. About one-quarter of seniors have signed up for the plans, which generally offer lower out-of-pocket costs. That’s been possible because the government pays the plans about 13% more than it costs to cover seniors in traditional Medicare. As the payments are scaled back, it could trigger an exodus from Medicare Advantage.
The Medicare prescription drug program and its unpopular “doughnut hole”, would be totally eliminated by 2020. At that point, seniors will be responsible for 25% of the cost of their medications until Medicare’s catastrophic coverage kicks in, dropping their co-payments to 5%.