For example, the Donut Hole discount provides Medicare Part D prescription drug plan members with a 75% discount (you pay 25% of retail) on all formulary brand-name drugs purchased in the Coverage Gap and a 75% discount (you pay 25% of retail) on all formulary generic drugs purchased in the Coverage Gap. You can click here to read more about the Donut Hole discount.
Supplemental coverage in the Donut Hole in addition to the 75% Donut Hole discount
However, each year, a few Medicare Part D plans (or Medicare Advantage plans) also provide supplemental Donut Hole coverage for their formulary drugs. For example, a Medicare Part D plan may continue to cover some Tier 3 Brand-name Drugs when you enter the Donut Hole at a $47 copay. In this situation, you will receive the 70% Donut Hole discount paid by the brand-name drug manufacturer in addition to the plan’s supplemental Donut Hole coverage (not the full 75% discount, but just the 70% paid by the drug manufacturers).
As an example, if you purchase a brand-name drug in the Donut Hole that has a negotiated retail cost of $200, and your Medicare Part D plan has coverage in the Coverage Gap for this medication, lets say a $90 copay, your actual cost for the purchase of this medication while in the Donut Hole would be $27 ($90 copay x 30%).
2024 Medicare Part D coverage
Starting in 2024, the Inflation Reduction Act (IRA) of 2022 eliminates cost-sharing for formulary drugs in the Catastrophic Coverage phase. This means, if you exit the 2024 Donut Hole and enter the Catastrophic Coverage phase, you will pay nothing more (cost-sharing will be $0) for all formulary Medicare Part D drugs through the remainder of the year.
Important Fact: 2024 is the last year that the Donut Hole will exist.
In 2025 one of the provisions of the Inflation Reduction Act (IRA) of 2022 is the elimination of the Coverage Gap (Donut Hole). Medicare Part D beneficiaries will stay in the Initial Coverage phase until they reach the maximum cap on out-of-pocket spending for Part D formulary drugs - RxMOOP - which is set at $2,000 for 2025. After reaching RxMOOP Medicare Part D beneficiaries will have a $0 copay for all formulary drugs.
2025 Medicare Part D coverage
