Medicare Part D - The Doughnut Hole

The doughnut hole, (also known as the coverage gap) is a stage of Part D prescription drug coverage during which the amount you pay for your prescription drugs increases. In the past, most people had to pay the full cost of their drugs in the coverage gap. However now due to the Affordable Care Act (ACA), members no longer have to pay the full cost of their drugs during this period.

The doughnut hole starts when the “total" drug costs of the drugs included in the plan (Note: the total is comprised of both what members have paid and also what their insurance plan have paid for their drugs), reaches a specified amount since the start of the calendar year. At that point when you are considered in the doughnut hole, then members start pay a set percentage on most brand-name drugs and a set percentage on generics, the manufacturer plus the federal government are responsible for the rest. (Note: Each year since ACA, the actual percentage owed by the member has been decreasing which is good news for the Part D plan members).

The even better news is that these percentages owed by the members are supposed to gradually decrease each year until 2020. Starting in 2020, members will typically pay no more than 25 percent of the cost of their drugs at any point during the year after they have met their deductible.

Members of their prescription drug plan (or members of their Medicare Advantage Plan, that include prescription drug coverage) get out of the coverage gap stage when they have paid a specific set amount of out-of-pocket expenses for covered drugs since the start of the year. Then at that point they move to the next stage called the catastrophic stage, which is when members start to pay a lot less. (Each year that specific set amount of out of pocket expenses for the catastrophic stage been changing.) The costs that help members get out of the coverage gap include what they spent on drugs, most of the discount on brand-name drugs that they received in the coverage gap, and the cost of drugs that someone else pays on their behalf (such as family members, most charities, or State Pharmaceutical Assistance Programs).

Related Blog Posts:

Medicare Part D and Prescriptions

Medicare Part D Gains May Be Eroding

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