You can estimate if - or when - you will enter Catastrophic Coverage
based on your average monthly retail drug cost (only the retail price for your formulary drugs).
For example, if you are using formulary drugs with a retail cost of about $891 in 2022, you will probably exit the Donut Hole or Coverage Gap and enter the Catastrophic Coverage phase.
But, since your Medicare Part D plan changes every year, your spending and timing of when (or if) you enter Catastrophic Coverage can also change -- keep in mind that 2023 is the last year that Medicare Part D plans will have a Catastrophic Coverage phase. For plan year 2024, the Inflation Reduction Act (IRA) of 2022
eliminates the Catastrophic Coverage phase.
In 2023 however, a person will exit the Donut Hole if their medication purchases average a total retail cost of over $877 per month and will enter Catastrophic Coverage - the higher your average monthly retail drug costs, the faster you will enter Catastrophic Coverage.
As an example, if you are using a Medicare Part D formulary drug
with a high retail price (assume $6,000), you would expect to enter the Catastrophic Coverage phase in early to mid-February of 2022 or 2023.
the Catastrophic Coverage phase, you will pay the greater of either 5% of the formulary drug's retail price or a fixed co-pay
(that is set annually) depending on the type of drug -- generics and
preferred brand drugs that are multi-source drugs or all other brand-name drugs. So, in this example, for a $6,000 drug, you would pay 5% of $6,000 or $300 per prescription for the remainder of the year.
Usually, we estimate when you enter Catastrophic Coverage based on your total out-of-pocket spending (TrOOP
), but in this FAQ, we are estimating your retail drug purchases necessary to meet your TrOOP. In other words, after you spend over $7,050 out-of-pocket in 2022
$7,400 out-of-pocket in 2023
, you will meet your Medicare Part D prescription drug plan's out-of-pocket spending limit (TrOOP), exit the Coverage Gap or Donut Hole phase
of your Medicare drug plan, and enter the Catastrophic Coverage phase - and based on annual Part D plan parameters
and past purchases of generic and brand drugs, we can estimate the retail drug costs necessary to meet your annual TrOOP.