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?
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 $4,660, 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 $388 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.)