Dear Savvy Senior

I’m about to reach the “donut hole” coverage gap for my Medicare Part D plan. I would like to find out how the new discounts that Medicare is now offering works, and any other suggestions you may have on how to save on my prescription drugs.

Paying Too Much

Dear Paying

For millions of seniors, the downside to Medicare’s Part D prescription drug plans has always been the coverage gap – also known as the donut hole. But starting this year (in 2011), financial relief is available. Here’s what you should know.

Donut Hole Discounts

As part of the new health care reform law, Medicare Part D beneficiaries that reach the donut hole this year will receive a 50 percent discount on their brand-name drugs, and a 7 percent discount on their generic medications.

How it will work is once your total drug costs for 2011 reaches $2,840 (that includes your share and the insurer’s share of the costs), you’ll get a 50 percent discount on your brand-name prescription drugs when you purchase them at the pharmacy or through the mail.

Then, after your out-of-pocket costs reach $4,550 for the year, you’ll qualify for catastrophic coverage and your Part D plan will pick up around 95 percent of your tab.

With these discounts, it’s important to understand that the entire cost of the drug (including the 50 percent discount and the 50 percent you pay) will be counted toward the amount you need to fill the coverage gap. The discounts will not leave you stuck in the donut hole longer!

In addition to the brand-name drug discounts, the government is also providing a 7 percent discount on generic drugs during the coverage gap. You will pay the remaining 93 percent of that price. But when you purchase generic drugs, only the 93 percent that you pay will count towards leaving the donut hole.

You can find more detailed information on Medicare’s new donut hole drug discounts at www.closingthecoveragegap.info.

Other Cost Cutters

In addition to the discounts, there are other things you can try to lower your drug costs in the donut hole. For starters, ask your doctor if there’s a generic or less-expensive brand-name drug you could switch to. About 75 percent of all premiums drugs on the market today have a lower-cost alternative.

You may also be able to save money by finding pharmacies that offer lower prices or by using a mail-order pharmacy. To find cost savings information on generics, less expensive brand-name drugs, and mail-order pharmacies see www.medicare.gov/find-a- plan.

Another cost cutter is to buy your medications in bulk. Many pharmacies give discounts if you buy a three-month supply of drugs versus a 30-day supply. Also, find out from your doctor or pharmacist if the pills you’re taking can be cut in half. Pill splitting allows you to get two months worth of medicine for the price of one. If they can be split safely, you’ll need to get a prescription from your doctor for twice the dosage you need.

Low Income Assistance

If you’re living on a limited income, you may be eligible for “Extra Help” paying for your prescription drugs. To be eligible, your annual income must be less than $16,245 for an individual and $21,855 for a married couple living together. And your assets must be limited to $12,640 for singles and $25,260 for married couples.

The value of your home and automobiles are excluded. To learn more call Social Security at 800-772-1213 or see www.ssa.gov/prescriptionhelp.

In addition to the Extra Help program, some pharmaceutical companies offer discounts that help seniors enrolled in Medicare drug plans (see www.medicare.gov/pap).

And many states offer help in paying drug plan premiums and/or other drug costs. Find out if your state has a program by visiting www.medicare.gov/spap.asp. Also visit www.benefitscheckup.org to search for national and community-based charitable programs that can help with your drug costs.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.

Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.