Close close icon

Medicare Part D Donut Hole (Coverage Gap)


Whether you’re about to enroll in a Part D plan or you’re currently enrolled in one, it’s important to understand how the Medicare donut hole works. Below, we’ll explain the stages of the donut hole and how to prepare for it.

What is the Donut Hole in Medicare?

The donut hole is the coverage gap in Medicare prescription drug plans. During this period; the beneficiary has a temporary limit on their Part D coverage. This means that after spending a specific amount on a drug plan, you’re responsible for copayments for prescriptions. Then, you’re responsible for costs up to a specific limit.

Medicare Donut Hole

How Does the Medicare Donut Hole Work?

Prescription drug coverage consists of multiple stages. The first stage starts when the year begins and involves reaching your deductible, which can be up to $445. You are responsible for paying 100% of this cost. Then, you reach the initial coverage stage, when you’re only responsible for copayments. After the cost of drugs reaches $4,130, you fall into the donut hole.

While you’re in the coverage gap, you’ll need to pay 25% of the cost of generic and brand-name drugs, until what you pay reaches $6,550. Catastrophic coverage kicks in when you’re out of the gap, leaving you responsible for just 5% of your drug costs. This lasts until the end of the year when your coverage ends and your plan restarts. The monthly statements you obtain from your plan provider should show your current status regarding the donut hole.

 Listen to this Podcast Episode Now!
 

How to Avoid the Medicare Donut Hole

How Do I Get Out of the Donut Hole?

You’ll get out of the gap when your costs for prescriptions during the gap period reach $6,550. You’re fully responsible for reaching this amount, but your drugs are also discounted while in the donut hole.

Once you reach the limit, catastrophic drug coverage kicks in automatically. When this happens, your policy will settle 95% of the remaining costs until the end of the year. Then, the cycle repeats every calendar year when you must start by meeting your deductible again.

Do Medicare Advantage Plans Cover the Donut Hole?

Private insurance companies manage Part C plans, which often include prescription drug benefits. These plans work similarly to standard Part D plans. Thus, they still involve coverage gaps. An Advantage plan might cover some generic medications in the donut hole, but these don’t serve to close the gap faster due to their lower prices.

What is Donut Hole Prescription Assistance?

Ask your doctor if any other medicine on your plan’s formulary would be as effective for your condition as the ones you’re currently using. Using lower-cost drugs, like generics or similar drugs, will substantially lower your costs.

It pays to have donut hole assistance like Extra Help or a state pharmacy assistance plan that can pay a portion or all your costs while in the gap.

If you don’t have extra coverage, you can consider:

  • Lower-cost drugs from countries like Canada
  • Free or low-cost medicines supplied by charities, patients’ organizations, or local medical clinics
  • Low-cost or free medicines from the assistance programs, managed by pharmaceutical manufacturers

FAQs

Why is there a donut hole in Medicare Part D?
The donut hole was originally created to incentivize people to use generic drugs. This would keep beneficiary costs low and also reduce the expenses of Medicare on the program level.
Do all Medicare Part D plans have a donut hole?
All Medicare prescription coverage involves the gap known as the donut hole.
Will I enter the donut hole if I receive Extra Help?
Those who get Extra Help pay reduced amounts for their prescriptions throughout the year, so they’re unlikely to reach the donut hole.
Why are my drugs more expensive in the donut hole?
During the initial coverage phase, your plan might pay more than the 75% that they must stick to during the donut hole phase. Thus, when you enter the donut hole, your drug costs might actually go up.
What costs count toward the donut hole?
The cost of the drugs on your plan’s formulary will count toward you entering the donut hole. For example, if you purchase a $500 drug and your copay is $75, $500 will count toward your Initial Coverage Limit.

How to Get Help with the Donut Hole

We understand that the donut hole is a confusing topic and we hope we helped you make sense of it. Many people with or without current prescription drug coverage have questions. Luckily, we're not only a Medicare education resource center – we can also help find the best coverage for you. Having Part D as soon as you're eligible for Medicare will ensure you don't incur a Part D late enrollment penalty.

Call the phone number above to speak with an agent about your options. If you don't have time to talk now, fill out our rate form so we can prepare a comparison of rates from the top carriers in your area.

Enter Zipcode

Enter your zip code to pull plan options available in your area.

Compare Plans

Select which Medicare plans you would like to compare in your area.

Get Quote

Compare rates side by side with plans & carriers available in your area.

Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

Comment

Your email address will not be published. Required fields are marked *