Is this normal (Medicare gap insurance question)?

In My Humble Opinion
1

I’m still new to Medicare, learning as I go. I got my first statement from my gap insurance about my prescription coverage.

Background: there are apparently three possible costs associated with prescription drugs: what I pay, what the insurance-discounted cost is, and the un-discounted “sticker” price from the manufacturer. So far this year, what I have paid is $0, what my insurance paid at their discount is $37.75, and the discount my insurance company got was $914.45. Therefore, the total of $952.20 counts against my $4,700 after which my insurance no longer covers (is this the famous “donut” I used to hear about?).

What surprised me is that the un-discounted sticker price is what counts in reaching this $4,700, rather than the insurance discounted cost. At this rate, I won’t make it through the year if I have to add any more prescriptions (which I might). Bear in mind that I have two prescriptions that are both very generic and normally very cheap drugs.

Is the insurance company out of line? Should I try to challenge their version of the drug costs?

2

The donut hole is in Medicare Part D, and it’s what your gap coverage is for - the the gap between the 75% coverage and the 95% coverage. If I understand Part D correctly, the 75% coverage ends around $2930 out-of-pocket, and that $4700 is the point at which Medicare starts to cover 95% of out-of-pocket . The entire cost of the drug is counted towards the amount needed to get out of the coverage gap, so it makes sense that that’s how the end of your gap coverage would be calculated as well. I suspect that the steep discount on your prescriptions is privately negotiated, and will go away when Medicare starts paying directly, as Medicare is not permitted to negotiate for lower prices.