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What is the Donut Hole or Coverage Gap?

The Donut Hole (or Doughnut Hole) is a term used to describe a gap in Medicare Part D prescription drug plan coverage or Medicare Advantage plan coverage where the Medicare plan member was 100% responsible for the cost of their prescription drugs - unless their Medicare plan provided them with some brand-name or generic drug coverage through the Donut Hole.

However, the good news is that starting with plan year 2011, Medicare Part D prescription drug plans and the pharmaceutical drug manufacturers share a portion of your medication expenses while you are in the Donut Hole (also known as the Donut Hole discount).

For instance, in plan year 2019, you may notice that your Medicare Part D plan will pay 63% of your generic medication costs in the Donut Hole and the pharmaceutical companies or Brand-name drug manufacturer will pay 75% of your brand-name drug purchases while in the Donut Hole.



Is the Coverage Gap the same as the Donut Hole?

Yes ... The Donut Hole refers to your Medicare Part D plan's Coverage Gap. The Donut Hole or Coverage Gap is the phase of your prescription drug plan after the Initial Coverage Limit.

The 2019 Donut Hole or Coverage Gap begins when the total retail costs of your prescription medication purchases exceeds $3,820.00 and the Donut Hole continues until your retail drug costs exceed $7,653.75 (again, this is for 2019 -- the Donut Hole limits change each year). The Donut Hole can also be said to end when your true out of pocket expense (or TrOOP) reaches $5,100.00. However, with the new Donut Hole Discount program, the discount you receive while in the Donut Hole is also counted toward your TrOOP. So if you purchase a brand-name medication with a $100 retail value and get a 75% discount, you still get credit for the portion of the discount paid by the Pharmaceutical Industry (50% of retail), plus the percentage of the retail cost you paid and combined, this amount is credited toward your annual TrOOP (or Donut Hole exit point).
You enter the Donut Hole based on retail drug costs and exit the Donut Hole based on your TrOOP

You will enter the Donut Hole or Coverage Gap portion of your Medicare Part D plan when the total "retail cost" of your medication purchases exceeds your plan’s Initial Coverage Limit. This "retail cost" figure is a combination of what you pay for you your medications plus the portion paid by your Medicare Part D plan.

For example, if you buy a medication at your local pharmacy that has a retail cost of $100, you will pay your plan’s co-payment or cost-sharing, maybe $30, and your plan will pay $70 or the balance of the $100 retail cost.  From this example purchase, the total retail cost of $100 is counted toward meeting your plan’s Initial Coverage Limit (ICL).

So once you have purchased medications with a retail value over your Medicare Part D plan's ICL, you enter your Medicare Part D plan’s Donut Hole.

Please remember that your Medicare Part D plan’s Initial Coverage Limit can change every year.  You can click here to see how the Initial Coverage Limit has changed since 2006.

After you meet your Medicare Part D prescription drug plan's out of pocket spending limit (TrOOP), you will exit the Coverage Gap or Donut Hole phase of your Medicare plan and enter the last phase of Medicare Part D coverage or Catastrophic Coverage.

For more, please see: What exactly is TrOOP or True Out of Pocket costs?


Some people consider the Donut Hole as a second deductible before the plan's Catastrophic Coverage phase begins. In other words, the CMS or Medicare model standard Medicare Part D plan for 2019 has a $415 deductible (100% paid by the individual) and then 75% coverage from $416 until $3,820.00 (25% paid by the individual). Then, as noted, after $3,820.00, the individual pays again 100% up to $7,653.75 (minus the Donut Hole Discount they might receive). After purchasing medications with a retail value of $7,653.75, the individual pays only 5% of the retail cost for their medications (or $3.4 for generics drugs and $8.5 for brand-name medications, whichever is higher).

Certainly, not every Medicare Part D prescription drug plan follows the CMS or Medicare standard defined model plan and some Medicare Part D plans provide additional coverage to close up the Donut Hole so that the individual would not face the out of pocket expenses in the Donut Hole (even when considering the Donut Hole Discount).

For example, some plans will provide coverage in the Donut Hole by using Generic Drugs with a copayment or alternatively, by using coverage of both Generic and Brand-Name Drugs with a different copayment for each. These types of plans will usually be available for a higher monthly premium and may not be available in all regions. Medications on such plans not covered during the Donut Hole may still receive the Donut Hole Discount. (For instance, you may have Tier 1 medications covered in the Donut Hole, but even though you will not have Donut Hole coverage on all formulary drugs, you will still receive the Donut Hole discount on the remaining Tier2, Tier 3, and Tier 4 formulary medications.)
How will I know if I reach the Donut Hole portion of my Medicare prescription plan?

Review your Explanation of Benefits.  Each month, your Medicare prescription drug plan will send you a printed Explanation of Benefits letter that will show you how close you are to entering the Coverage Gap or Donut Hole portion of your Medicare Part D plan.

Also notice when the price you pay for your medications changes.  If you do not review your Explanation of Benefits letters, you may notice your entry into the Donut Hole because the cost of your medications has increased (it could be the cost of one medication or all of your medications at once).  Remember that with the Donut Hole discount, the additional Donut Hole cost may not be too great so some people already paying a high co-insurance may only notice a slight change in the price.

You can also calculate when you will enter the Donut Hole.  You will be able to take your plan's Initial Coverage Limit (for example, if your Initial Coverage Limit is $3,820.00, you can divide by 12 months.  If your monthly retail drug costs are over this monthly amount (not what you spend with your Part D coverage, but the actual retail value of your prescriptions), you will enter the Donut Hole sometime during the year.  In our example, if you purchase formulary medications with a retail value of over $276 per month, you will enter the Donut Hole during this year.

And you can also our online Donut Hole Calculator.  To help you visualize how far you are from the Coverage Gap, you can also try our Donut Hole Calculator where you enter the monthly retail value of your medications and see a chart of your costs across the Part D coverage phases. Our Donut Hole Calculator can be found at: PDP-Planner.com. (The Donut Hole discount calculations can be found at the bottom of the chart.)

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Tips & Disclaimers
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDP-Compare.com and MA-Compare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.