Are You in the Medicare Part D Donut Hole?

Man reviews label of prescription bottle

Many people think of the delicious treat when they hear “Donut Hole” — not the terrifying gap in prescription drug coverage that all Medicare prescription drug plans are required to include.

Keep reading to learn what the gap is and whether you’re at risk of entering it.  

What is the Medicare Part D Donut Hole?
The Donut Hole is one of four different coverage stages that a member of a Part D prescription drug plan may encounter during the calendar year. 

If you enter the Donut Hole, you may have to pay higher drug prices until the next January 1 or until your out-of-pocket costs qualify you for another stage of coverage.

Part D four coverage stages:
The 4 stages of Part D determine how your prescription drug costs are covered. This process restarts on January 1 each year.   

1. Deductible Stage

Not all plans include a prescription drug deductible, which is the amount you’re responsible for paying before your plan begins to pay its share. If your plan does not include a drug deductible, you would begin in the Initial Coverage Stage.

2. Initial Coverage Stage

Most members of a Part D prescription drug plan begin in the Initial Coverage Stage. In this stage, you pay your copays, and your plan pays the remaining costs. 
This stage ends when the total cost of your drugs (your copay plus the amount your plan pays) reaches $4,660. Once you reach this amount, you enter the Coverage Gap Stage (Donut Hole).

3. Coverage Gap Stage (Donut Hole)

In the Donut Hole, you are responsible for 25% of the cost of generic and brand-name Part D medications. For brand-name Part D medications, your plan and the manufacturer pay the remaining 75% of the cost. For generic Part D medications, Medicare covers 75% of the cost.

You will remain in the Donut Hole until your out-of-pocket costs reach $7,400. (The entire cost of the Part D brand-name drug minus the 5% your plan covers counts toward this out-of-pocket maximum.) Once you hit the out-of-pocket maximum, you will enter the Catastrophic Coverage Stage.

What costs can I count toward the Out-of-Pocket Maximum? 

  • Your yearly deductible, coinsurance, and copayments
  • Discount you get on brand-name drugs in the Donut Hole
  • What you pay in the Donut Hole

What costs can I NOT count toward the Out-of-Pocket Maximum?

  • Drug plan premium
  • Pharmacy dispensing fee
  • What you pay for drugs that are not covered

4. Catastrophic Coverage Stage

When you enter the Catastrophic Coverage Stage, you will pay the greater of 5% of the total cost of the drug or $4.15 for generic drugs and $10.35 for brand-name drugs. You will remain in this stage until January 1, when the Part D prescription drug coverage stages reset.

Getting close to the Donut Hole and need help?
Assistance is available if you are in the Donut Hole or are getting close to it. Check out these ways to lower your prescription drug costs.

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