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How does Obamacare affect prescription drug coverage?

If you’ve ever experienced sticker shock over the price of a prescription drug, you’ll be glad to know that they’ll be more affordable starting in 2014.prescription drugs

That’s due to two provisions of the Affordable Care Act (ACA), also known as Obamacare. One requires that new insurance plans include prescription drugs in their coverage. The other closes the Medicare Part D "doughnut hole." I’ll explain what that is in a moment, but it’s not a sugar-glazed treat.

Prescription drug coverage under Obamacare

The Affordable Care Act requires that each state sell qualified health insurance plans in marketplaces or exchanges. The plans must cover 10 types of essential health benefits—and prescription drugs are one of them.

However, it’s important to note that plans won’t have to cover all drugs. They will be required to cover medications that have been proven medically necessary and cost-effective.

In addition to the exchanges, Medicaid will be expanded in some states, providing health coverage and prescription medication for millions of low-income Americans. So far, 23 states and the District of Columbia have chosen to expand Medicaid, while the rest of the states have either chose to opt out, or are still deciding.

Individuals who earn up to 133 percent of the poverty level, or $15,281, qualify for Medicaid.

What is the Medicare doughnut hole?

I mentioned that closing the Medicare "doughnut hole" will make prescription drugs more affordable.

Medicare only covers prescriptions until seniors reach an initial coverage limit, which is $2,970 in 2013.

After that, seniors receive no financial help. They must pay for everything until the total cost of their medications reaches $4,750. Then they qualify for catastrophic coverage.

The period in which seniors must pay 100 percent of their medication costs is referred to as the “doughnut hole”.  And this has potentially life-threatening effects on Medicare recipients.

"Many people either stopped taking their medication entirely or they would cut their medication in half," says Nicole Duritz, AARP's vice president for health and family education and outreach.

The Affordable Care Act gives seniors discounts on prescription drugs, which gradually increase until the coverage gap disappears altogether in 2020. In 2013, those discounts amount to 52.5 percent on brand name drugs and 21 percent on generic drugs for people in the "doughnut hole."

What’s the future of prescription drugs under Obamacare?

We still don't know all the ways Obamacare will affect prescription drugs, says Michelle Spinnler, a spokeswoman for the American Pharmacists Association.

"The reality is that, until the program is fully implemented in 2 to 3 years, we won’t have a full grasp of how patient access is affected,” Spinnler says, adding that consumers also won’t know how drug costs will be affected until the health exchanges launch in October 2013.

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