What is the Medicare Coverage gap or "donut hole"?

Medicare Coverage gap or "donut hole," is a period of time in which you pay higher costs for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the donut hole) starts when you and your plan have paid a set dollar amount for prescription drugs during that year.

There's a coverage gap (sometimes known as the "donut hole") in most Medicare prescription plans. This indicates that the cost of the drugs that the prescription plan will cover has a temporary cap.

The Medicare "coverage gap" or "donut hole" is a temporary limit on what Medicare Part D prescription drug plans will cover for the cost of prescription drugs. Medicare PART D Prescription Drug Coverage Gap The coverage gap applies to beneficiaries who have reached a certain spending threshold on their prescription drugs.

In 2024, the coverage gap will begin once the total cost of a beneficiary's prescription drugs reaches $5,030.00 During this period, the beneficiary is responsible for paying a larger portion of the cost of their prescription drugs. Specifically, the beneficiary is responsible for paying 25% of the cost of their brand-name drugs and 37% of the cost of their generic drugs. The Medicare Part D plan pays the remaining portion of the cost.

Once the beneficiary has spent a certain amount out-of-pocket on prescription drugs during the coverage gap, they will enter the "catastrophic coverage" phase of their Medicare Part D plan. During this phase, the beneficiary pays a smaller coinsurance or copayment for their prescription drugs.

In 2023, you will be eligible for "catastrophic coverage" automatically whenever your out-of-pocket expenses surpass $7,400. This usually implies that for the remainder of the year, you will only have to pay a minimal copayment or coinsurance percentage (no more than 5%) for your approved Part D medications Medicare PART D Catastrophic Coverage .

Starting January 1, 2024, once your out-of-pocket spending reaches $8,000 (including certain payments made by other people or entities, including Medicare's Extra Help program, on your behalf), you will automatically get catastrophic coverage. This means you won't have to pay a copayment or coinsurance for covered Part D drugs for the rest of the calendar year.

Medicare will pay 75% of the price for generic drugs during the coverage gap. You'll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.

You will only be responsible for paying up to 25% of the cost of brand-name prescription medications covered by your plan after you cross the coverage gap. If you order your medicines by mail or purchase them from a pharmacy, you will be charged this discounted price. You might be able to get even cheaper coverage gap charges with certain plans. The amount that your plan has agreed upon with the pharmacy for that particular medication will be deducted from the discount.

To help you bridge the coverage gap, nearly the whole cost of the prescription medication will be counted as out-of-pocket expenses (tooltip), even if you'll only pay up to 25% of the brand-name drug's total cost. The amount you pay will be deducted from your out-of-pocket expenses, as will the manufacturer's payment, which is 95% of the drug's cost.

1. Of the total cost of the drug, the manufacturer pays 70% to discount the price for you. Then your plan pays 5% of the cost. Together, the manufacturer and plan cover 75% of the cost. You pay 25% of the cost of the drug.
2. There is also a dispensing fee. Your plan pays 75% of the fee, and you pay 25% of the fee.

• Your yearly deductible, coinsurance, and copayments
• The discount you get on brand-name drugs in the coverage gap
• What you pay while you're in the coverage gap

• The drug plan premium
• Pharmacy dispensing fee
• What you pay for drugs that arent covered

It's important for Medicare beneficiaries to be aware of the coverage gap and plan accordingly to avoid falling into it. Strategies for avoiding the coverage gap may include choosing less expensive generic drugs, using drug manufacturer discounts or coupons, and talking with their healthcare provider about ways to reduce prescription drug costs.