Medicare Part D 'Donut Hole'

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What's the Donut Hole? Good question—we'll explain.
What's the Donut Hole? Good question—we'll explain.

The 'Donut Hole' is a coverage gap

Most Medicare Part D drug plans have a coverage gap–also known as the "donut hole"–that limits what the drug plan will cover after a certain dollar amount is reached.

Once you and your plan spend $3,8201 on covered drugs (the combined amount plus your deductible) in 2019, you'll be in the coverage gap. The gap extends until you reach $5,100 in out-of-pocket costs, at which point you are in what's called catastrophic coverage.

What is the Medicare Part D Coverage Gap?
Initial Benefit $3,820. Donut Hole $3,821 - $5,099. Catastrophic Coverage $5,100+.

The good news: Pharmacies like Walgreens provide discounted prescriptions for Part D recipients in the coverage gap.

What do you need to do?

In the coverage gap: You'll need to pay your premiums and out-of-pocket drug costs from the time you meet your deductible (if your plan has one) until you reach catastrophic coverage. If you have a Medicare prescription drug plan that includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug price. The discount for brand-name drugs will apply to the remaining amount you owe.

After the coverage gap: Once your costs exceed the coverage gap ($5,100 in 2019) you'll be in catastrophic coverage and responsible for 5% of your prescription drug costs for the rest of the year.

Brand-name vs. generic discounts

For covered brand-name prescription drugs, in 2019 you pay 25%, but the entire price counts as out-of-pocket costs, which helps you get out of the donut hole.

For generic prescription drugs, you'll pay 37% of the cost in 2019. With generic drugs, only the amount you pay counts towards getting you out of the donut hole.

Here's what counts towards the coverage gap:

  • Your yearly deductible, coinsurance, and copayments
  • The discount you get on brand-name drugs in the coverage gap
  • What you pay in the coverage gap

Here's what doesn't count:

  • Your drug plan premium
  • The pharmacy dispensing fee
  • What you pay for drugs that aren't covered

Who qualifies for these discounts?

You'll receive the discounts once you reach the coverage gap if:

1 Source: q1medicare.com/PartD-The-2019-Medicare-Part-D-Outlook.php