A non-government resource for the Medicare community
Powered by Q1Group LLC
A non-government Medicare community resource
  • Menu
  • Home
  • Contact
  • MAPD
  • PDP
  • 2023
  • FAQs
  • Articles
  • Search
  • Contact
  • 2023
  • FAQs
  • Articles
  • Latest Medicare News
  • Search

What do I pay when the purchase of my medications moves me into the Donut Hole, my plan coverage or the Donut Hole discount price?

Category: Donut Hole Discounts
Updated: Jun, 06 2023

Both.  When you purchase your medications, the retail cost of your drug can move you from one part of your Medicare Part D plan coverage into another part.

When this occurs and your prescription purchase moves you between Medicare plan coverage phases, you will have a “straddle claim” and you will notice a difference in your drug cost as a portion of coverage will fall into two or more parts of your drug plan.  In this example, the cost of your prescription medication purchase is split between your Initial Coverage Phase and your Donut Hole phase.

As a note, the negotiated retail cost of your medications determines when you reach the Initial Coverage Limit (ICL) -- and the ICL can change each year.  The standard ICL for 2023 is $4,660 ($5,030 in 2024).  So when the negotiated retail cost of you medications is over $4,660, you will move into the Coverage Gap. (To see the Initial Coverage Limit for another year, you can use the link: https://q1medicare.com/PartD-The-MedicarePartDOutlookAllYears.php.)

Once you exceed your Initial Coverage Limit, you will enter the Donut Hole portion of your Medicare Part D plan coverage and the remainder of your prescription purchase will be reduced by the Donut Hole discount.
So you will pay your plan's cost-sharing (copayment or coinsurance) for your medication PLUS you will pay 25% of the balance of the negotiated retail price above the Initial Coverage Limit that falls into the Donut Hole (the 75% donut hole discount is applied. You can click here to read more about the Donut Hole discount).

How does this work?  Example of a 2023 Straddle Claim:

Your Medicare Part D plan's negotiated retail price of your formulary drug: $1,000
Your total accumulated retail drug costs before the $1,000 drug purchase: $4,540
Your Medicare Part D plan has a standard $4,660 Initial Coverage Limit
Your plan's coverage cost or co-pay for the $1,000 formulary drug: $100

1. Your cost to exit the Initial Coverage phase

First, you will need to spend $120 to meet the $4,660 Initial Coverage Limit ($4,660 - $4,540) - and you will pay $100 as a co-pay for your medication during this phase.

2. The cost in the Donut Hole

Next, the balance of the retail cost or $880 ($1,000 - $120) will carry over to the next phase of your drug coverage or the Donut Hole where you will receive the 75% Donut Hole discount costing you $220 in the second portion of this straddle claim.

3. Your total cost for the $1,000 drug

So together in 2023, you would pay $100 + $220 for a total cost of $320 for this drug.

Question:  Can the coverage cost exceed the retail drug cost?

No.  The total of your plan's cost-sharing plus the Donut Hole cost (not including the Donut Hole discount) cannot exceed the normal negotiated retail price of your medication -- as you never pay more than the negotiated retail price.
Click here to see another example and further explanation of what happens when you buy a medication and the cost moves you into the Donut Hole portion of your Medicare Part D plan.

Follow up Question:  So, if the total cost of one drug purchase takes my annual cost over my Medicare plan's coverage limit and into the Donut Hole, will I pay the copay for my drug plus the discounted cost that is over the coverage limit?

Yes.  Please see our Frequently Asked Question: Q1Faq.com/504

Medicare Supplements
fill the gaps in your
Original Medicare
1. Enter Your ZIP Code:
» Medicare Supplement FAQs

Browse FAQ Categories

Tips & Disclaimers
  • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
  • 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 PDPCompare.com and MACompare.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.
    Statement required by Medicare:
    "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
  • 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.