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First Medicare rebate checks arriving

WILLMAR -- Refund checks are starting to trickle through the mail to Medicare recipients whose high prescription drug expenses pushed them into the "doughnut hole" last year.

The one-time tax-free rebates, for $250 apiece, are being issued under a provision of the new health care reform law that aims to close the gap in Medicare prescription drug coverage.

Kate Selseth, aging program director at the Minnesota Valley Area Agency on Aging, and her staff have had few phone calls or questions so far about the refund checks. But she expects that to change by fall, as more seniors qualify for the rebate.

"It will be as they reach the doughnut hole," she said. "Earlier in the year it's not as many."

Some 300,000 Medicare recipients nationwide were eligible for the most recent round of rebates that were mailed out in June.

Minnesota officials say that by the end of this year, some 65,000 Minnesotans will have received the $250 refund.

JoAnn Jagt, who oversees the Health Insurance Counseling Program at Rice Memorial Hospital, thinks the money will be welcomed by older adults with high prescription drug costs.

Generally, it's those who are on the most medications, or who are taking expensive specialty drugs, who enter the annual doughnut hole, she said.

During this gap in coverage, they must pay 100 percent of their prescription drug costs until they reach the threshold for catastrophic coverage.

In 2010, the initial coverage limit for the standard Medicare Part D benefit is $2,830, including co-pays. Beneficiaries enter the doughnut hole at this point and remain there until they've reached an out-of-pocket threshold of $4,550.

"It gets steep. It's hard for them," Jagt said.

Some people who reach the doughnut hole are paying the full cost of their prescription drugs for two, three or even five months, Selseth said. "That's just too hard to do."

Under the Affordable Care Act, which was signed into law in March, the doughnut hole will be narrowed over the next few years until it's eliminated.

The one-time rebate checks are the first step. Next year, eligible individuals who reach the doughnut hole will receive a 50 percent discount on name-brand drugs. The gap will be fully closed by 2020.

Not everyone is eligible for the $250 rebate. Those who aren't enrolled in a qualified prescription drug plan won't be able to receive a rebate, nor will those who are already receiving Medicare Extra Help, also known as the low-income subsidy.

Medicare enrollees who qualify for the rebate will be notified by mail once they arrive at the doughnut hole, Selseth said. "They get a letter first, then the check."

Beneficiaries don't need to do anything else to receive their rebate, according to federal officials.

Helping older adults deal with the high cost of prescription drugs is one of the biggest tasks of the Area Agency on Aging, Selseth said.

"That's where we put a lot of our staff time -- researching drug programs that'll help offset the cost as they go into the doughnut hole," she said.

Anne Polta

Anne Polta covers health care, business/economic development and general assignment. Her HealthBeat blog can be found at Follow her on Twitter at @AnnePolta.

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