• Question #8 on page 486 at the end of chapter 16
Artie, Bella, and Carmen are Medicare Part D recipients. Artie currently has $1000 in prescription drug costs each year. Bella and Carmen have $3000 and $6000, respectively. Each has a mild case of insomnia and a new drug. Has just been introduced to treat their condition. It will cost $1000 per year. Which of the three is most likely to take the new drug? It is indicated that Medicare part D would cover 75% of the cost of the drug. Therefore, for Artie since adding the new drug would increase his expenditures from $1000 to $2000. The drug would therefore cost him an additional $250 out of pocket each year. Bella would have to pay a full $1000 out of pocket for the drug, since she is in the donut hole of coverage between $2500 and $5100 per year. Furthermore, Carmen is above the donut hole and would have to pay only $50 (5% of $1000) for the drug. Therefore, then Carmen would be the most likely to take it, than Artie or Bella. Carmen would most likely take the newer drug because it would be the cheapest option for her. Medicare would help cover the costs and she would have to pay $50.
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Individuals have traditionally purchased Medi-gap policies that cover this gap by paying for the out of pocket cost not covered by Medicare. But some Medigap policies did not cover this 20%