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The Medicare Part D Donut Hole Discount (2011 to 2020)

About 7.1 million Medicare beneficiaries reached the Coverage Gap (also known as the Donut Hole) phase of their Medicare Part D Prescription Drug plan coverage in 2013.


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% 30% 80% 20% 50%
2020 - beyond 25% 75% 25% 75% 25% 50%



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 $75 credit toward getting out of the Donut Hole.


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