Once the total retail value of your Medicare Part D drug purchases exceeds your Initial Coverage Limit of $5,030 in 2024, you will enter the 2024 Donut Hole or Coverage Gap and pay 25% of the retail price for all formulary medications – assuming that your Medicare prescription drug plan does not provide any coverage in the Donut Hole.
However, you will get a credit of 95% of the retail cost ($237.50) toward meeting your annual total out-of-pocket limit (TrOOP) of $8,000, because your medication is a brand-name drug. If it were a generic drug, you would still pay 25%, but you would only get credit toward TrOOP for the 25% you paid.
If you exceed the $8,000 out-of-pocket limit in 2024, you will reach the Catastrophic Coverage phase of your Medicare Part D coverage and you will pay nothing for your formulary medication purchases for the remainder of the year.
Keep in mind that 2023 was the last year that Medicare Part D beneficiaries paid cost-sharing in the Catastrophic Coverage phase. For plan year 2024 and beyond, the Inflation Reduction Act (IRA) of 2022 eliminates beneficiary cost-sharing in the Catastrophic Coverage phase.
2024 Medicare Part D coverage
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
For more information, please see our FAQ: Will my Catastrophic Coverage drug costs change over the years?
As a reminder: You can use our Drug Finder ( on this site) to see the average retail cost of any medication covered by your Medicare prescription drug plan. But remember, your actual negotiated retail drug prices can vary pharmacy-to-pharmacy and even week-to-week at the same pharmacy.