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Medicare Part D 'Donut Hole'


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 $3,7001 on covered drugs (the combined amount plus your deductible) in 2017, you'll be in the coverage gap. The gap extends until you reach $4,949 in out-of-pocket costs, at which point you are in what's called catastrophic coverage.

Initial Benefit $3,700. Donut Hole $3,701 - $4,949. Catastrophic Coverage $4,950+.

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 ($4,950 in 2017), 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 2017 you pay 40%, 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 51% of the cost in 2017. 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:

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