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The Donut Hole: A Step-By-Step Explanation

What is the donut hole?

What is the Donut Hole and will it affect you?

This video provides a detailed explanation of the Medicare Part D drug coverage stages, what the "Donut Hole" is and how it factors into your out-of-pocket costs.

The Medicare Part D donut hole, or Coverage Gap, is one of four stages you may encounter during the year while a member of a Part D prescription drug plan. Specifically, the donut hole is the point in the year when your prescription benefits change because the total cost paid by you and the plan have reached the Initial Coverage Limit. If you enter the donut hole, you may have to pay a higher price for your medications until the next January 1, or until your out-of-pocket costs qualify you for another level of insurance called Catastrophic Coverage.

Understanding the Medicare Donut Hole (PDF)

 

The four coverage stages: 
 

Deductible Stage:

A prescription drug deductible is the amount you pay for drugs before we begin to pay our share. Members of Tufts Medicare Preferred HMO Value Rx, Basic Rx, and Saver Rx plans have a Part D (prescription drug) deductible for drugs on Tier 3, Tier 4, and/or Tier 5. All other plans do not have a Part D deductible. If you are a member of Tufts Medicare Preferred HMO Value Rx, Basic Rx, or Saver Rx plan:

  • There is no deductible for drugs on Tier 1 and Tier 2.
  • However, your plan has a deductible for drugs on Tier 3, Tier 4, and/or Tier 5.
  • The deductible counts toward any combination of drugs on Tiers 3, 4, and 5. You will not pay a separate deductible for each tier.
  • After you pay the deductible, you will pay only your copay for Tier 3, 4, and 5 drugs.

Initial Coverage Stage:

  • Most members with a Part D prescription drug plan will start in the Initial Coverage stage. (If you are a member of Tufts Medicare Preferred HMO Value Rx, Basic Rx, or Saver Rx plans, see the Deductible stage section above for information on your Part D deductible.)
  • The Initial Coverage stage ends when the total cost of your drugs (your copay PLUS the amount that Tufts Health Plan Medicare Preferred pays for your drug) reaches $3,820.
  • After you reach a total of $3,820, you enter the Coverage Gap stage, also known as the donut hole.

Coverage Gap Stage (the Donut Hole):

While in this stage, you are responsible for:

  • 37%* of the cost of generic (non-brand name) Part D medications. Tufts Health Plan Medicare Preferred pays the remaining 63% of the cost.
  • You are also responsible for 25% of the cost of Part D brand name medications.
  • The drug manufacturer pays 70% of the cost of Part D brand name medications and Tufts Health Plan Medicare Preferred pays the remaining 5%.
  • The entire cost of the Part D brand name drug - minus the 5% that Tufts Health Plan Medicare Preferred is responsible for - goes toward your out-of-pocket maximum of $5,100.
  • Once your total out-of-pocket costs reach the maximum of $5,100, you enter the Catastrophic Coverage stage.

*If you are a member of  HMO Prime Rx Plus plan, you pay your Tier 1 and Tier 2 copays for tiers 1 and 2, 37% of the cost for all other generic drugs, and 25% of the cost for brand name medications.

Catastrophic Coverage Stage:

  • You enter the Catastrophic Coverage stage when your total out-of-pocket costs (what you pay PLUS what the drug manufacturer pays) reach $5,100.
  • While in Catastrophic Coverage you will pay the greater of: 5% of the total cost of the drug or $3.40 for generic drugs and $8.50 for brand-name drugs.
  • You will remain in the Catastrophic Coverage Stage until January 1.

This process resets every January 1st.

Learn more about the Medicare Part D donut hole

Help is available if you are in the donut hole or are getting close to it:

There are many resources available to individuals who reach or who are at risk of entering the gap:

  • Prescription Advantage: An income-based assistance program for Massachusetts residents that may help you pay for your prescription drugs once you are in the donut hole. Your income level will determine the level of assistance you are granted. For more information call 1-800-AGE-INFO (1-800-243-4636) TTY 1-877-610-0241, or visit www.mass.gov.
  • Low Income Subsidy (LIS), or Extra Help: LIS is an income-based assistance program run by the Social Security Administration. If you qualify, you may receive help paying for your monthly premium and prescription drug copays. For more information, contact Medicare at 1-800-633-4227 (TTY 1-877-486-2048), the Social Security Office at 1-800-772-1213 (TTY 1-800-325-0778), or your State Medicaid Office. 
  • Pharmaceutical Company Prescription Assistance Programs: You may also qualify for help with the cost of certain medications through prescription assistance programs offered by the drug manufacturer. Every drug manufacturer has certain criteria that you must meet in order to qualify for help. If you need assistance, contact Customer Relations.