Medicare Part D Coverage Gap (“Donut Hole”)
If you have Medicare prescription drug coverage, you need to be aware of the Medicare Part D coverage gap, also known as the “donut hole.” This is a period of time when you might have to pay more for your prescription medications.
Not everyone will encounter the coverage gap. It begins after you and your plan have spent a certain amount for your prescription drug coverage, and ends when you’ve reached a different spending threshold.
- The coverage gap applies to stand-alone Medicare Prescription Drug Plans and Medicare AdvantagePrescription Drug plans.
- When you and your plan have spent a combined amount of $3,750 (in 2018) – including the plan deductible – the coverage gap begins.
- Then, instead of paying your usual copayment or coinsurance for your medications, you’ll typically pay 35% of the plan’s cost of brand-name drugs, and 44% of the plan’s cost of generic drugs, in 2018. This percentage will gradually decrease year by year until 2020, when you’ll pay 25% of the costs of any prescription drug covered by your plan, whether brand-name or generic.
- If your spending totals $5,000 (in 2018), the coverage gap ends and you have “catastrophic coverage.“ From that point until the end of the year, you pay only a small copayment or coinsurance for your prescriptions.
What counts toward the coverage gap (“donut hole”) spending threshold
Once you’ve entered the coverage gap, Medicare counts the following amounts toward your out-of-pocket spending for the year:
- The amount you pay for your prescription medications
- Your plan’s annual deductible
- The copayments or coinsurance you’ve paid
- The plan’s cost for any brand-name drug you’ve purchased through your plan. Note that this doesn’t apply to generic drugs. For example, if a brand-name drug costs $50:
- You pay 35% of that cost ($17.50).
- Suppose the manufacturer discount for this drug is $25. Although you paid $17.50, Medicare will count $42.50 towards your out-of-pocket spending.
The manufacturer’s discount should show up on the Explanation of Benefits document that Medicare sends you every month that you’ve bought prescriptions. If you don’t see a discount listed for a brand-name drug you bought, contact your plan and ask about it.
What doesn’t count toward the coverage gap (“donut hole”) spending threshold
During your coverage gap, Medicare does not count the following amounts toward your out-of-pocket spending for the year:
- The amount you pay for any prescription medications that aren’t covered by your plan
- Your plan’s monthly premium
- Any pharmacy dispensing fee that your drugstore may charge
- Any amount paid by an Employer Group Health Plan, Auto Insurance, Workers’ Compensation, Liability Insurance, a Medigap plan, the Federal Employees Health Benefit Program, Veterans Administration, Tricare, and by Medicaid.
If your out-of-pocket spending for Medicare Part D (as listed in “What counts toward the coverage gap (donut hole) spending threshold” above) totals $5,000 (in 2018), you’ll pay only a small coinsurance or copayment for your medications for the rest of the year.
Getting help paying your prescription drug costs
If you need help paying for your medications:
- You might want to see if you qualify for Medicare Part D Extra Help, a government-sponsored low-income subsidy program. To find out if you qualify, contact the Social Security Administration or your state Medicaid office.
- Some pharmaceutical manufacturers offer lower prices through the Pharmaceutical Assistance Program.
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You must continue to pay your Medicare Part B premium.
This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply.
Benefits, premiums and/or copayments/co-insurance] may change on January 1 of each year.
The pharmacy network may change at any time. You will receive notice when necessary.