The Debt Ceiling Crisis and the Medicare Part D “Donut Hole”: What You Need to Know

There have been some wildly conflicting messages coming out of Washington lately when it comes to Medicare, and especially Medicare Part D. On the one hand, with the passage of President Obama’s healthcare plan, the government has promised to do away with the problem of the Medicare Part D “Donut Hole,” which burdens seniors who have prescription costs that are high, but not catastrophic. And on the other hand, the recent debt ceiling crisis has renewed calls from the other side of the aisle to cut funding to key programs that seniors rely on, especially Medicare and Social Security.

In trying to reach the bottom of this debate, the first thing it’s important for you to know is that, although a temporary compromise was reached to end the debt ceiling crisis in the short term, no final decisions have yet been made. In fact, several facets of government spending – including Medicare and Social Security – are set to be reviewed by an upcoming “super committee” that will make recommendations to the president and Congress.

And so, although the Medicare Part D “Donut Hole” was set to be done away with by the year 2020, there remains the possibility that prescription coverage may actually decrease, instead of increasing. Ultimately, the answer will probably rest on political bargaining, as well as the results of the upcoming election.

Here are a few other things seniors need to know about the Medicare Part D “Donut Hole” and the long-term effects of the recent debt crisis:

The government needs to cut costs, but those cuts probably won’t be straightforward. There is a reason Congress likes complicated schemes: It gives them a chance to increase revenue while claiming they haven’t reduced benefits. For that reason, it remains a strong possibility that whatever comes out of the “Donut Hole” debate won’t be the clear, straightforward policy that seniors are hoping for.

If there are changes to Medicare Part D, they probably won’t be enacted quickly. The sheer size of these programs, not to mention the political process, suggests that any shifts that are made will take at least a few years to enact. So, if you are counting on a fix to the Medicare Part D “Donut Hole” problem to help with your retirement planning in the short term, it’s a good idea to have backup options.

With or without changes to Medicare Part D, some prescriptions will still be expensive. Not all medications are covered by Medicare Part D, and even among those that are, some still have very high co-pay rates. For those seniors who can fit it into their budget, supplemental insurance remains an attractive option, especially for those who may have prescriptions that fall outside of Medicare Part D, or want coverage in areas – like vision and dental – that don’t always fall under the Medicare umbrella.

We’ll have to wait and see what sort of answers the government comes up with for the future of Medicare, and especially whether they are willing to put an end to the Medicare Part D “Donut Hole” that has been a burden to so many seniors for years. In the meantime, however, the best advice we can give is to not expect change to come too quickly, and to do what you can to protect your own health.