Over 5,254,000 seniors and people with disabilities have saved $3.7 billion on prescription drugs since the enactment of the Affordable Care Act. In the first five months of 2012, 745,000 people with Medicare saved $453.3 million on prescription drugs in “donut hole” coverage gap for an estimated $651 in savings, according to date released from The Centers for Medicare & Medicaid Services (CMS).

The Affordable Care Act has had a valuable impact strengthening Medicare and allowing seniors to take better care of their health. The law has brought about important benefits, such as free annual check ups and free preventive services, such as screenings for chronic diseases.

Most Medicare health care plans that cover prescription drugs (Part D) have a coverage gap that is called a “donut hole”. This means that when a person spends a certain amount of money for drugs covered in the plan, they then need to pay all drug costs with their own money until they have reached a yearly limit.

People in the “donut hole” receive a 7 percent discount on all generic brands. Once they reach their yearly limit, the coverage gap ends and their Medicare plan pays for their covered drugs again.

Once people reach the coverage gap in their Part D coverage, they will automatically get a 50 percent discount on covered brand name drugs and a 14 percent discount on generic drugs. The percentage of discounts will continue to increase until 2020 when the coverage gap is closed.

“Thanks to the health care law, millions of people with Medicare have been paying less for prescription drugs,” said Marilyn Tavenner, CMS Acting Administrator. “The law is helping people with Medicare lower their medical costs, and giving them more resources to stay healthy. By 2020, the donut hole will be fully closed thanks to the Affordable Care Act.”

After people with Medicare hit the Medicare Part D prescription drug coverage gap or “donut hole”, the savings are automatically applied to their prescribed drugs.

In 2010, people with Medicare received a one-time $250 rebate when they hit the donut hole. These people started to receive the 50 percent discount on covered brand name prescribed drugs in the donut hole since 2011.

This year, there has been a 14 percent coverage increase for generic drugs in the coverage gap. The coverage gap will no longer exist in 2020; but until then, Medicare will increase its coverage for generic and brand name drugs each year.

Obama signing health care-20100323
President Barack Obama signing the Patient Protection and Affordable Care Act at the White House, March 2010

Written by Sarah Glynn