The New Health Care Law: $250 Rebate for Medicare Part D Beneficiaries

Most Medicare part D prescription drug plans have a coverage gap - often called the "donut hole" - during which beneficiaries must pay the entire cost of their prescription drugs while at the same time continuing to pay their full Part D premium. One of the immediate changes which will result from enactment of the historic 2010 health care reform laws will be a  one-time $250 payment to help Medicare beneficiaries who fall into the "donut hole."  An estimated four million Part D beneficiaries will be responsible for all of their drug costs when they enter the drug coverage gap known as the "donut hole" in 2010.  To help these beneficiaries afford their medications, one-time $250 rebate checks will begin mailing on June 10, 2010 (and about every six weeks after to cover beneficiaries that fall into the gap after that date).

Beginning in 2011, 50 percent discounts will apply for brand-name drugs and a small discount for generics. These discounts will be increased annually through 2020, when the donut hole will be completely closed.

You do not need to take any action!
It is crucial that seniors realize they do not need to do anything to get these payments. If you are eligible, the $250 donut hole rebate check will come to you automatically in the form of a paper check. Be wary of anyone who offers to help you receive an electronic payment. Offers of assistance in obtaining the rebate check are likely to be fraudulent and could result in theft of your identity information.

Unlike the stimulus payments sent to seniors in 2008, no paperwork must be filed for the Part D rebate. At that time, seniors had to file a tax return to receive a "tax rebate," but it won't be necessary to do so for the "donut hole rebate."

Don't Confuse this with Other Rebate Checks

Unlike the stimulus payments sent to seniors in 2008, no paperwork must be filed for the Part D rebate. Seniors had to file a tax return to receive this "tax rebate," but it won't be necessary to do so for the "donut hole rebate."

The Part D payment should also not be confused with the $250 stimulus payment sent in 2009 to eligible Social Security and Supplemental Security Income beneficiaries as part of the American Recovery and Reinvestment Act (otherwise known as the "stimulus package").

In addition, the donut hole rebate check should not be confused with recent legislative initiatives to provide a one-time $250 payment to beneficiaries to make up for the fact that there will be no Social Security Cost of Living Adjustment (COLA) in 2010. Proposals for a $250 emergency payment to seniors are contained in President Obama's 2011 budget and legislation such as Senator Bernard Sanders' Emergency Senior Citizens Relief Act (S.1685). The National Committee to Preserve Social Security and Medicare continues to advocate for this payment, as it did for the 2008 and 2009 "stimulus" payments, but a payment for 2010 has not yet been secured.

Schedule of Payments

"Donut hole" checks will generally be sent out every quarter. Although it is always possible for checks to be delayed, below is the planned schedule for distributing payments:

Government Relations and Policy, June 2010