As a licensed insurance broker I find the prescription drug coverage difficult to understand. If it is confusing for me, I figured it must be even more confusing for those enrolled in a senior health plan.

The prescription drug plan is Part D of the senior health plan called Medicare. Part D plans have a premium that must be paid monthly and some plans have a deductible.

Let’s take a stroll through a scenario of prescription coverage for my friend Mr. Schultz. Mr. Schultz has selected a plan with a $310.00 deductible. It works just like all high deductible health plan. Once you pay the deductible the insurance kicks in. Mr. Schultz takes four different drugs. Two are generic and two are brand name. He pays, or meets, the deductible in June. After that Mr. Schultz will pay a copayment and his plan will pay its share for each covered drug until the COMBINED amount between what the insurance company pays and what Mr. Schultz pays reaches a total of $2,840.00. Mr. Schultz is now in the hole of the donut! Most senior health plans refer to it as the coverage gap. In 2011, he will get a 50% discount of covered brand-name prescription drugs that counts as out-of-pocket spending. When Mr. Schultz has spent $4,550.00 total out of his own pocket his coverage gap will end. Now, Mr. Schultz will only pay a small copayment for each drug until the end of the year.