The other day I received an email from someone I know in Texas and in the email she talked about a serious financial problem she is having because of Medicare’s donut hole.
My healthcare coverage plan must be different because I was not even aware of anything called a donut hole – the only donut holes I have ever known about were the donut holes you bought at Dunkin Donuts and brought to work to share with friends.
The email caught my attention and I did what I normally do to learn about something – surf the web.
The first problem is that after you put in the search criteria – in this case, “Medicare donut hole” you are returned with an extensive list of sites to choose from for you to learn more about the subject you are researching. It might take an hour or two for one to decide on a handful of sites to access to acquire the most accurate information.
I do not tend to go to Wikipedia because it is not always accurate – anyone can change verbiage in Wikipedia and because of that I tend to scroll down until I click on what appears to be a site that contains meaningful information they have put together for the public to view.
Also, I tend to bypass government sites because they tend to either be so technical or they are written by government “experts” and you end confused about the issue instead of informed. Why? Is it possible that the government wants you to be confused and in the dark about a given subject? I think so.
So, in this case, I settled on http://arthritis.about.com/od/medicare/a/doughnuthole.htm, where I found some meaningful information that made me hate our Congress even more for passing such a terrible piece of legislation that drains money from seniors at an alarming rate.
The problem, as I see it, is that all through our working life we have had pharmaceutical companies bombard us with television commercials telling us to, “Ask your doctor if “XXXXX” is right for you.” Thanks to either free golf vacations or cruises or kickbacks in one form or another – your doctor writes you a prescription for the product you might not even need – especially if the drug manufacturer is sponsoring one of his/her vacations.
After a few years, you have a kitchen countertop or a medicine cabinet full of prescriptions that supposedly you cannot live without. You are afraid to discontinue any of them. The monthly cost of copays for these prescriptions exceeds your phone bill and maybe even your car gasoline bill.
So, now you are retired and on Medicare and Social Security and you are thinking all is going to be well. You finally have arrived at a point where you will pay copays for your drugs that you cannot live without – but you still think all will be well.
All will be well until the proverbial “donut hole” kicks in.
Depending on which plan you choose, you pay fairly reasonable copays until the total cost of your drugs reaches $2250.00.
Unfortunately, if you are taking a good amount of drugs, especially if some of them are brand name versus generic, it doesn’t take long to reach the $2250.00.
At this point, you are in the infamous “donut hole.” God knows why they call it the donut hole but believe me, this period is not something tasty to seniors – they really should have called it “the Caster Oil Period” because you will be left with a very bitter taste in your mouth until you eventually crawl out if it.
So, let’s get back to what happens during the “donut hole” period. Once the $2550 has been reached, you start paying full price for your prescriptions until the total cost of the prescriptions reaches $3600.00 – then you fall into “catastrophic coverage” where your cost per drug drops to a small co-pay (usually $2 or $5) or 5% co-insurance, whichever is greater.
What group of rich legislators came up with this plan to rip off average Americans? Whoever they were, they were in the pocket of the pharmaceutical industry.
Another possible plan would be to make the “donut hole” a sliding scale depending on the income level of the individual Medicare recipient – someone making very little would have a $0 for the donut hole and would have the same copays during the entire year but someone making over a specific income level might have a donut hole much smaller – let’s say between $2550 and $3000. Another possibility is to raise the base for the donut hole to something like $10,000 and the ceiling for the donut hole would be 11,050. Fewer Americans would be impacted and if impacted it would be further into the calendar year.
So, in appreciation for what these rich legislators did to Medicare, by including a “donut home” provision, why don’t we encourage our legislators to implement a “donut hole” in our tax code?
Maybe we can push for a 15 percent tax rate on the first $10,000 of dividend income and then have the tax rate on say the next $100,000 increase to 65 percent and then for all dividend income above $100,000, the rate could drop to 10 percent.
Most low income and middle income Americans will not have dividend income above $10,000, so it will not impact maybe 85 percent of Americans, but it could and should impact those Americans in the highest income levels.
One final possibility is to determine either the existence of a “donut hole” or not based on the income level of the person on Medicare Part D. If their only source of income is Social Security, then the “donut hole” can be reduced to $0.00, in effect making it non-existent.
Something has to change and change soon. Congress is looking at cuts in Social Security and Medicare, while at the same time not doing anything about reverting back to the tax rates that existed before George W. Bush took office.
Very affluent Americans do not need their dividends taxed at a very low 15 percent and they could easily afford a modest tax rate increase on ordinary income.
The gap between the ultra-rich and poor and average Americans keeps widening every year and it is only going to get worse.
We are now at a period in our country’s history where average and poor Americans have to decide whether to pay for their medications OR their utilities OR food because they no longer can pay for all three.
On the other hand, the ultra-rich only have to decide whether they want to purchase something very expensive at Tiffany’s and/or Nordstrom’s and/or Neiman-Marcus. I hope you noticed that I did not capitalize the “or” regarding the rich.
They can easily afford to visit and purchase from all three stores without feeling the slightest pinch in their wallet.
There is nothing wrong with the rich being rich but when the rich circumvent the tax code by “offshoring” their money to avoid taxes it hurts lower income Americans exponentially. If they earned their money through mergers and acquisitions and outsourcing and they laid-off average Americans strictly to maximize their profits, the ultra-rich gained their economic prosperity in a way that hurts middle and low income Americans.
One solution supposedly is to rewrite the Tax Code.
Unfortunately, if the rich continue to have Congress in their back pockets and front pockets and watch pocket, the Tax Code will be rewritten to the benefit of the Ultra-Rich and the rewrite will result in average Americans losing more in the process.
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