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What Is the Medicare Coverage Gap Discount Program


With a rise in drug costs year over year, Medicare beneficiaries often wonder how they will pay for their medications once they reach the Medicare Part D coverage gap (donut hole). The Medicare Coverage Gap Discount Program offers discounts to prescription drug policyholders while they are in this coverage phase.

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How Does The Medicare Coverage Gap Discount Work?

With the passing of the Affordable Care Act, the Medicare Coverage Gap Discount Program became available to those on Medicare Part D. This program offers a discount on brand-name medications while in the coverage gap. It also allows for some coverage on generic medications.

Who Is Eligible for The Coverage Gap Discount Program?

To be eligible for the Coverage Gap Discount Program, a beneficiary must meet the following criteria.

What if any – but not all – of the above is true for you? Unfortunately, you will not be able to utilize the Medicare Coverage Gap Discount Program. However, it is always best to discuss available options with your plan administrator if you struggle with copayments or deductibles.

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 far you are from the next coverage phase.

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.

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.

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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.

Medicare Coverage Gap Discount Program in 2022

In 2022, 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 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 experts in all things Medicare. We will be able to answer all your questions on the first interaction, clearing any confusion you may have.

To contact a Medicare expert, you can simply call the number at the top of the page. Can’t talk now? Complete our online rate form and we will reach out to you. We are available six days a week to help you get on the right track with your Medicare coverage.

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Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

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