Why is it called the Coverage Gap or Donut Hole?
Originally (2006 through 2010) the Coverage Gap was the phase of your Medicare Part D prescription drug coverage when you were 100% responsible for your medication costs — that is unless you qualified for the Low Income Subsidy (LIS) also known as the "Extra Help" program or your Medicare Part D plan offered additional coverage for purchases made while in the Coverage Gap. The 2010 Coverage Gap rebate check was a way to start relieving the financial burden of entering the Coverage Gap.
In 2010, as part of the Affordable Care Act's efforts to close the Medicare Part D Coverage Gap (the portion of a Medicare prescription drug plan where the Medicare beneficiary is 100% responsible for their medication costs), the U.S. Department of Health and Human Services automatically sent a one-time, tax-free $250 rebate check to each Medicare Part D plan member who reached their prescription drug plan’s Donut Hole (or "Doughnut Hole").
How Much is the Donut Hole Discount?
From 2011 through 2020, the percent you pay on formulary medication purchases made while in the Coverage Gap (Donut Hole) will continue to decrease until you are paying a fixed 25% coinsurance on both brand-name and generic drug purchases.
Medicare Part D Prescription Drug Plan Coverage Gap (Donut Hole) Discount |
|
Generic Drug Purchases |
|
Brand-Name Drug Purchases |
Plan Year |
You Pay (Amount that Counts Toward TrOOP) |
Discount (Paid by Your Plan) |
|
You Pay |
Amount that Counts Toward TrOOP |
Discount (Paid by Your Plan) |
Drug Manufacturer Discount |
2006 - 2010 |
100% |
0% |
|
100% |
100% |
0% |
0% |
2011 |
93% |
7% |
|
50% |
100% |
0% |
50% |
2012 |
86% |
14% |
|
50% |
100% |
0% |
50% |
2013 |
79% |
21% |
|
47.5% |
97.5% |
2.5% |
50% |
2014 |
72% |
28% |
|
47.5% |
97.5% |
2.5% |
50% |
2015 |
65% |
35% |
|
45% |
95% |
5% |
50% |
2016 |
58% |
42% |
|
45% |
95% |
5% |
50% |
2017 |
51% |
49% |
|
40% |
90% |
10% |
50% |
2018 |
44% |
56% |
|
35% |
85% |
15% |
50% |
2019 |
37% |
63% |
|
25% |
95% |
5% |
70% |
2020 - beyond |
25% |
75% |
|
25% |
95% |
5% |
70% |
Closing the Coverage Gap
Now, as we move toward closing the Coverage Gap (Donut Hole), seniors receive a discount that increases each year (see chart above) for purchases made while in the Coverage Gap.
For the years 2020 and beyond, seniors will pay 25% for both generic and brand-name drug purchases in the Donut Hole. Medicare considers the Coverage Gap "closed"
at this point because based on the CMS Standard Model Medicare Part D plan, you would be paying the same cost-sharing (that is, 25%) for purchases made while in the
Initial Coverage Phase AND in the Coverage Gap — so you have the same coverage through both phases of coverage. In other words, in 2020 when you reach the Donut Hole
or Coverage Gap phase of your Medicare Part D coverage and purchase a formulary medication with a $100 negotiated retail drug cost, you will pay $25. And if the drug is a brand-name drug,
you will get $95 credit toward getting out of the Donut Hole.
Also see our FAQ section:
Closing the Coverage Gap