Archive: Does the Donut Hole or Coverage Gap restart every year on January 1st or do we stay in the Gap from the previous year?

Your Medicare Part D prescription drug plan coverage starts again each year — and along with your new coverage, your Donut Hole or Coverage Gap begins again each plan year.

For example, your 2023 Donut Hole or Coverage Gap ended on December 31, 2023 (at midnight) along with your 2023 Medicare Part D plan coverage.

Your new 2024 Medicare Part D plan begins on January 1, 2024 and marks the new starting point for your annual drug spending that will determine when (or if) you enter the 2024 Donut Hole or Coverage Gap. As a reminder, you will enter the Donut Hole or Coverage Gap when the total retail value of your formulary prescription purchases exceeds your Medicare Part D plan's Initial Coverage Limit (so what you spend plus what your plan spends — which added together is the retail value of your medication).

And this means: If your prescription drug usage does not change in 2024 (and retail prices for your medications remain stable — which is doubtful), your Donut Hole or Coverage Gap should start just slightly later in 2024 since the 2024 standard Initial Coverage Limit of $5,000 is $340 higher than the 2023 standard Initial Coverage Limit of $4,600.

In other words, you will be able to purchase slightly more prescriptions before entering the 2024 Donut Hole as compared to 2023.

You can use the following link to see how the Initial Coverage Limit has changed over the past years on this site

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.