Can you avoid falling into the Medicare donut hole?

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.

Medicare rules and private insurance plans can affect people differently depending on where they live. To make sure the answers here are as accurate as possible, Phil is working with the State Health Insurance Assistance Program (SHIP). It is funded by the government but is otherwise independent and trains volunteers to provide consumer Medicare counseling in state and local offices around the country.

Moeller is a research fellow at the Center on Aging & Work at Boston College and co-author of “How to Live to 100.” Follow him on Twitter @PhilMoeller or e-mail him at

Debi – Calif.: My husband takes many prescriptions daily and when we got to November we apparently entered “the donut hole,” as my pharmacist likes to call it, and the prescriptions have begun to cost so much we now have to pick and choose what we can or cannot afford. Are there some plans that have higher limits so we don’t fall into the donut hole?

Phil Moeller: Provisions of the donut hole are not set by individual insurers but by Medicare. The Affordable Care Act is doing away with this problem over time but it will be with us until 2020. Here’s an explainer of how the donut hole works. There is a program called Extra Help that provides subsidies to pay for drugs under Medicare, and you can go here to see if you qualify. If this is confusing, you also could try contacting the free Medicare counseling service called SHIP.

Anonymous – Hawaii: My husband turned 65 in January 2011. However, since he was covered under my health insurance plan, he did not have to make a Part B election until eight months after July 2012 when I retired. At the end of that period, he chose not to enroll in Part B, mainly because I chose not to elect Part B, deciding to depend solely on the federal employee’s health insurance.

For me, the choice continues to be a good one. However, his health has deteriorated recently and it may be best for him to now elect Part B, even with the penalty. I would like to know, first, the tax year that would be used to calculate his Part B premiums based on our income: would it be 2012, 2011 or some year before 2011?

My second question is whether the penalty would be assessed for each year beginning in 2011 when he turned 65 or for each year beginning in 2013 when he last had the option to elect Part B.

Third, I’m wondering whether the penalty is cumulative.

Phil Moeller: First off, best wishes to you and your husband. I hope his health recovers and that both of you can fully enjoy your retirements. Now, down to business.


How to plug holes in your Medicare coverage

There’s usually a two-year lag so you’d use 2012 income if he applies in 2014 and 2013 income if he does so in 2015. The income figure that Medicare uses to determine Part B premiums is your modified adjusted gross income, which is your adjusted gross income plus any tax-exempt interest income you received. The base Part B premium to which a penalty would be added depends on your income. This will be $104.90 a month next year for people whose incomes are less than $85,000 ($170,000 if filing a joint tax return). It can rise much higher for those with larger incomes.

Second, the penalty is not assessed until he finally signs up. And third, saving the worst for last, the penalty is cumulative and will last for the rest of his life. There is a late enrollment calculator on the Medicare site that will allow you to plug in the specific dates and income levels that apply to you. Based on the time since he turned 65, it looks like his Part B premium would incur a 30 percent penalty. If he qualified for the basic Part B premium, for example, his monthly payment would round off to $136.40 ($104.90 plus the 30 percent penalty of $31.47). Good luck!

Margaret – N.M.: I am changing Part D prescription plans (or trying to). I have been in my plan for over two years, but it is terminating in 2015. Is there such a thing as prescriptions being denied due to pre-existing conditions? Or is this a non-issue?

Phil Moeller: You cannot be denied drug coverage when your Medicare plan is cancelled and you’re forced to shift to another plan. However, the new plans available may not include your drugs in their formularies and are not required to charge you the same prices as your old plan did. If you haven’t already done this, and it’s not too late, go to Medicare’s Plan Finder and take a close look at your available plans. If you’re having trouble using Plan Finder (it is not easy to use), you might try calling the free SHIP counseling program for Medicare users.