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Medicare Coverage Gap Discount Program

Summary: The Medicare coverage gap discount program allows medications to be more affordable in the coverage gap (donut hole) phase by providing a 75% discount for the retail price. Estimated Read Time: 4 min

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Table of Contents:

  1. What is the Medicare Coverage Gap Discount Program?
  2. Medicare Coverage Gap Discount Program in 2024
  3. How Does The Medicare Coverage Gap Discount Work?
  4. Who Is Eligible for The Coverage Gap Discount Program?
  5. How Do I Know If I Reach the Coverage Gap?
  6. How Does the Coverage Gap Discount Work with Brand-Name Drugs?
  7. Does the Coverage Gap Discount Program Work With Generic Drugs?
  8. How To Know if You Qualify for the Medicare Coverage Gap Discount Program

The Medicare coverage gap is the phase in which your drug plan temporarily stops paying for any of the cost for your prescription drugs.

As drug prices continue to rise, Medicare beneficiaries have become increasingly worried over how they will pay for their medications once they reach the coverage gap phase (donut hole) of their prescription drug plan.

The prescription drug coverage gap discount program offers manufacturers discounts to Medicare Part D recipients during the coverage gap to allow them easier accessibility to the drugs they require.

Below, we review how the Medicare coverage gap discount program works and who qualifies.

What is the Medicare Coverage Gap Discount Program?

The Medicare coverage gap discount program allows you to spend 75% less for your prescription drugs during the donut hole phase than you typically would if this program was not in place.

Every person who enrolls in a Medicare Part D plan and reaches the coverage gap will benefit from the coverage gap discount program. The only exception is those who are covered by “Extra Help”. These individuals will still receive the same level of coverage as they typically receive during this phase.

During the coverage gap, you are responsible for paying 100% of the cost of your prescription drugs. However, due to the Medicare coverage gap discount program, drug manufacturers are reducing your costs by assuming a portion of the cost on your behalf.

Drug manufacturers will provide you with a 75% discount on every drug you receive during the coverage gap that is covered by your plan’s formulary. This means, you are only responsible for coving 25% of the total retail cost. You are paying just a quarter of what you would typically pay without this program in place.

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Medicare Coverage Gap Discount Program in 2024

In 2024, The Medicare Coverage Gap Discount Program will provide eligible beneficiaries with a 70% manufacturer discount on brand-name drugs. In addition, your prescription drug plan carrier is responsible for 5% of the cost. This means the beneficiary is only responsible is 25% of the drug’s retail cost.

For generic drugs, the beneficiary will also only need to pay for 25% of the retail cost of the medication out-of-pocket.

How Does The Medicare Coverage Gap Discount Work?

The Medicare coverage gap discount program became available to Medicare Part D enrollees in 2010 following the passing of the Affordable Care Act. This program allowed for a discount on all brand name medication covered by your Medicare Part D formulary.

The discount program has since been expanded to cover both brand and generic medications once you enter the donut hole.

When you go to the pharmacy, your pharmacist should be able to pull up your plan information and note that you have entered the coverage gap. There is nothing additional you must do on your end to receive the discount; it will be automatically added when you go to pay for your drugs.

Who Is Eligible for The Coverage Gap Discount Program?

To be eligible for the Medicare coverage gap discount program, a beneficiary must meet the following criteria.

  • Currently enrolled in a Medicare prescription drug plan or a Medicare Advantage Plan that includes prescription drug
  • Reached and currently in the coverage gap
  • NOT a recipient of Extra Help

Unfortunately, if you do not meet all of the above criteria, you will not be able to utilize the Medicare coverage gap discount program.

However, it is always recommended to discuss available options with your plan administrator or licensed insurance agent. If you are struggling with making copayments or deductibles, they may have knowledge of resources available to assist you.

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How Do I Know If I Reach the Coverage Gap?

The coverage gap begins when you reach a set amount of spending for prescription drugs through your Medicare Part D or Medicare Advantage prescription drug plan for the calendar year. Each month, you should receive a benefit statement from your Medicare Part D or Medicare Advantage carrier explaining your out-of-pocket costs and how much you have spent during this calendar year.

Once your spending reaches the coverage gap threshold, you will enter into this drug phase. While there is nothing additional for you to do when you are at the pharmacy, it is good to keep track of where you are spending wise so you can anticipate changes in your copayments when picking up your prescriptions.

How Does the Coverage Gap Discount Work with Brand-Name Drugs?

Companies who manufacture brand-name drugs sign contracts with Medicare, stating they will abide by Medicare’s coverage gap discount program. Once you reach the coverage gap, you will receive a set discount on the name-brand drugs that you purchase from a pharmacy. In 2024, the coverage gap discount is 75%.

While you are in the coverage gap, although you only pay a portion of the drug price, your cost and the manufacturer’s cost of the drug will count towards the catastrophic drug phase.

This discount you receive is recalculated annually. Each October, new guidelines come out for the following year. Since the prescription drug plans and guidelines change from year to year, it is recommended to review your Medicare Part D plan each year during the Annual Enrollment Period to ensure you enroll in the best plan for your needs.

Does the Coverage Gap Discount Program Work With Generic Drugs?

When it comes to generic drugs, the principle of the discount program remains the same. You will receive a set discount, regardless of the generic drug’s cost.

Yet, when you purchase a generic medication using the discount program, only the amount you pay out-of-pocket counts toward the catastrophic drug coverage phase. So, if you are taking mostly generic drugs during this coverage phase, it will definitely take you longer to get out of the donut hole than if you were taking brand name drugs.

How To Know if You Qualify for the Medicare Coverage Gap Discount Program

To understand the Medicare Coverage Gap discount program, it is best to speak with a licensed agent. Our licensed agents are highly skilled in all things Medicare. We will be able to answer all your questions on the first interaction, clearing any confusion you may have.

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To contact an agent, you can simply call the number at the top of the page or complete our online rate form to compare plans online. We are available six days a week to help you get on the right track with your Medicare coverage.

Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Coverage Gap Discount Program, CMS . Accessed February 2024.
    https://www.cms.gov/medicare/health-drug-plans/coverage-gap-discount-program
  2. Closing the Coverage Gap— Medicare Prescription Drugs Are Becoming More Affordable , KFF. Accessed February 2024.
    https://www.kff.org/wp-content/uploads/sites/2/2012/06/11493.pdf
Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare guru serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Medicare Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

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