Yes.  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 (ICL).  This "retail cost" figure is a combination of what you pay for 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.  In 2024, the standard Medicare Part D Initial Coverage Limit is $5,030 - and so after your purchase the $5,030 ICL would be reduced by $100.

Naturally, if your Medicare Part D plan has an initial deductible, all formulary drugs that you purchase during the deductible - where you are paying the full retail drug cost - will count toward your plan's ICL. For example, if you purchase a formulary drug for the full retail cost of $100, the $100 you spend counts toward meeting your deductible and toward meeting your ICL and entering the Coverage Gap.

In short, 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 (usually increasing).  You can click here to see how the Initial Coverage Limit has changed since 2006.


* In some infrequent situations, the amount paid by another party toward your drug coverage may also count toward reaching the Donut Hole or Coverage Gap.  For example, in 2023, the Inflation Reduction Act (IRA) was implemented and provides that a Part D plan can charge no more than a $35 copay for a 30-day supply of covered insulin.  But since the IRA was passed so late in 2022, most 2023 Medicare drug plans had already submitted finalized plan designs and were not prepared for a $35 (or less) insulin during the plans initial deductible.  So in 2023, the federal government covered a portion of the cost for insulin in the deductible and the full retail cost of insulin counted toward meeting the plan's deductible and reaching the Coverage Gap.  In this situation, what the government paid in 2023, and what the person paid, counted together toward meeting the ICL.


Important Update:  2024 is the last year for the Coverage Gap or Donut Hole.

Starting in 2025, the Inflation Reduction Act (IRA) eliminates the Coverage Gap (Donut Hole).  In 2025 and beyond, Medicare Part D beneficiaries will stay in the Initial Coverage phase until their out-of-pocket spending for Part D formulary drugs (TrOOP) reaches the maximum out-of-pocket spending limit for Part D formulary drugs (RxMOOP) - which is set at $2,000 for 2025.  After reaching RxMOOP, Medicare Part D beneficiaries will enter Catastrophic Coverage and have a $0 copay (no additional costs) for all formulary Medicare Part D drugs through the remainder of the year.

2025 Medicare Part D coverage