Mr. Smalley is a retiree on the Medicare prescription drug plan. This year his drug expenditures are $15,100. What percentage will Medicare pay of the medications that cost between $6,657.50 and $15,100?

Question

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Medicare has a coverage gap known as the “donut hole” where the plan pays a limited amount of drug expenses until a certain threshold is met. Once the threshold is met, the beneficiary enters the coverage gap and Medicare pays 95% of the cost of medications until the out-of-pocket threshold for total drug costs is reached. Therefore, in this case, Medicare will pay 95% of the cost of medications between $6,657.50 and $15,100.

Mr Smalley Is a Retiree on the Medicare Prescription Drug