Medicare Part D Coverage Gap: The Donut Hole

If you get your prescription drugs through a Medicare Part D prescription drug plan, your plan probably includes a coverage gap (also called the “donut hole”) if you spend a certain range of money on drugs each year.

In this coverage gap, your insurance provider will temporarily stop covering a portion of your drugs until you’ve reached your plan’s out-of-pocket limit.

The Part D donut hole can affect your Medicare drug spending.

What Is the Medicare Part D Donut Hole Coverage Gap?

You are in the coverage gap once you and your plan have spent more than $5,030 in 2024 on prescription drugs.

• After this amount, you will be responsible for paying a larger portion of the cost of your drugs until you reach the threshold for “catastrophic coverage” ($8,000 out-of-pocket in 2024).

• The costs you pay for drugs while in the coverage gap "donut hole" contribute to your out-of-pocket total.

Once your prescription drug spending exceeds $8,000 in 2024, you are out of the coverage gap, and you will typically only be responsible for a small copay or coinsurance amount for the rest of your drugs for that year.

You can compare the costs of Part D plans available where you live and enroll in a Medicare prescription drug plan online when you visit MyRxPlans.com.

What Are the Medicare Part D Costs in 2024?

The price you pay for drugs once you reach the coverage gap depends on the price your plan has set with your pharmacy for that specific drug.

• Generally, if you are purchasing brand-name drugs, you will pay no more than 25 percent of the agreed-upon price of the drug during your coverage gap.
  
  Makers of brand-name drugs may offer a discount on most prescriptions to people in the Medicare donut hole, as long as you get your drugs at a pharmacy or through the mail.

• If you are purchasing a generic drug while in the Medicare Part D coverage gap, you pay no more than 25 percent of the price of the drug in 2024. This entire amount contributes towards your out-of-pocket limit, which will help you get out of the donut hole.

How Much Have Medicare Donut Hole Costs Changed?

In 2014, the Affordable Care Act (also known as Obamacare) altered the way the Medicare Part D coverage gap functions to help lower costs for people stuck in the donut hole.

Under this law, the amount beneficiaries might pay for drugs while in the coverage gap decreased each year until the year 2020. These percentages only apply to Medicare Part D beneficiaries who are in the donut hole coverage gap.

Find a Medicare Supplement (Medigap) Plan That Helps Cover Your Medicare Costs

While Medicare Supplement (Medigap) plans don't cover prescription drugs, they can help pay for some of the out-of-pocket costs that Medicare doesn't cover. These costs can include things like Medicare deductibles, copays, coinsurance and more.

For example, each of the 10 standardized Medigap plans that are available in most states provide at least partial coverage for the Medicare Part B coinsurance or copayments you might face when you receive covered outpatient treatments.

A licensed agent can help you decide on a Medicare option that works for you. Call today to speak with a licensed agent and compare the Medigap plans that are available where you live.

Christian Worstell is a health care and policy writer for MedicareSupplement.com. He has written hundreds of articles helping people better understand their Medicare coverage options.