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First $250 Medicare rebate checks are in the mail

Starting today, many Medicare beneficiaries here and across the country will start receiving $250 checks to help pay for their prescription medications. The checks, one of the first tangible benefits of the new federal health reform law, are meant to help close a gap in Medicare drug coverage that's known as the "doughnut hole."

Groups such as the AARP say the checks will help millions of older or disabled Americans — especially those on fixed incomes — cope with the rising costs of prescription drugs. But at the same time, $250 represents only a fraction of what many Medicare beneficiaries spend out of pocket on medications each year.

Checks will be sent out to people such as Jeff Burk, 56, of Tampa, who receives Medicare benefits because he is disabled, and Lillian Holloway, 82, of Gulfport. Both take a variety of medications daily, fell into the doughnut hole last year and may again this year. Here are answers to questions you may have about the gap and the plan to fill it:

What is the doughnut hole, and why does it exist?

It's a gap in coverage during which the Medicare beneficiary pays 100 percent of the costs of medications until he or she qualifies for catastrophic coverage. The doughnut hole starts after a person's total drug bill in the current calendar year surpasses $2,830 and ends once costs have hit $6,440.

The doughut hole exists because Medicare would go broke without some sort of coverage limit. The hope, too, is that beneficiaries will economize by such measures as using generics to stay out of the hole, but for many people, the hole is unavoidable.

Who will receive the $250 checks?

The checks will be mailed to every Medicare prescription drug plan member who reaches the doughnut hole in 2010 but doesn't qualify for low-income subsidies. The government was expected to send out the first batch of about 80,000 checks Thursday and plans to issue a total of 4 million checks this year. That includes an estimated 325,000 to Floridians. You don't need to apply for the rebate check; it will be sent automatically within 45 days after you reach the doughnut hole.

Will the checks be mailed every year?

No. The $250 checks are a one-time rebate, the first of several steps to close the coverage gap. In 2011, people who reach the doughnut hole will receive a 50 percent discount on brand-name prescription drugs. That discount will increase steadily until 2020, when it reaches 75 percent. That effectively closes the doughnut hole, since members pay 25 percent of drug costs before reaching their initial coverage limit.

Are certain people more likely to fall into the coverage gap?

According to an analysis by the Henry J. Kaiser Family Foundation, those who have fallen in have tended to be older (32.6 percent were age 85 or older) and have one or more chronic conditions. Of people taking drugs for Alzheimer's disease, 64 percent reached the gap, as did 51 percent of those taking medication for diabetes.

That includes people such as Burk, who is diabetic and became disabled in 2004 after suffering a seizure and falling into a coma. He now takes 11 medications regularly, including two types of insulin and four drugs to keep his blood pressure under control.

But how far can $250 go?

Many of the drugs taken by people in the doughnut hole are expensive. According to the Kaiser foundation, the Alzheimer's drug Aricept costs nearly $200 a month, the blood thinner Plavix is about $150, and the asthma drug Advair Diskus is about $200.

Burk and Holloway said they have taken steps to reduce their drug costs.

Burk said that once he reaches the doughnut hole, his doctors sometimes give him free samples of the medications he's prescribed. He said he has also written to drug companies to explain his financial hardship (he receives a Social Security disability check and a small VA pension), and some have offered discounts.

Holloway said her daughter helped her find better prices for her prescriptions through mail order.

"I'm hoping not to reach the doughnut hole this year," she said.

Richard Martin can be reached at rmartin@sptimes.com or (727) 893-8330. For the latest in health news, visit tampabay.com/health.

>>Fast facts

How the doughnut hole works

1. Seniors in a standard Medicare prescription drug plan first pay a $310 deductible.

2. Then they pay 25 percent of the cost of their drugs until they reach $2,830 in total drug costs (or $940 in total out-of-pocket costs).

3. Then they enter the doughnut hole. They pay 100 percent of drug costs until they reach $6,440 in total drug costs (or $4,550 in total out-of-pocket costs).

4. At that point, they leave the hole and pay 5 percent of their drug costs for the rest of the calendar year. The process starts again Jan. 1.

For more information, visit www.medicare.gov.

First $250 Medicare rebate checks are in the mail 06/10/10 [Last modified: Thursday, June 10, 2010 11:02pm]

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