Archive: If I purchase only one Part D medication per month that has a $430 retail value, will I enter the 2024 Donut Hole?

Yes, sometime in December. If you purchase formulary medications with a total retail value of over $420 per month you will enter the 2024 Donut Hole. You enter the 2024 Donut Hole or Coverage Gap portion of your Medicare Part D prescription drug plan coverage after you purchased formulary drugs with a total retail value of $5,030, which is the 2024 standard Initial Coverage Limit.

So, if your Medicare Part D coverage begins in January and your monthly negotiated retail drug costs exceed $420, you will entered the 2024 Donut Hole.

Remember, you enter the Donut Hole or Coverage Gap based on retail drug cost - not what you spend, but the retail value of the formulary drugs you purchase. So if you buy a formulary generic that costs $100 and pay only a $3 copay, the $100 counts toward entering the Donut Hole.

Question: Isn't the Donut Hole closed?

Yes, but... Although we say that the Donut Hole "closed" since you receive a 75% discount on all formulary drugs purchased in the Donut Hole, but the Coverage Gap remains the third phase of your Medicare Part D coverage. So you will leave your Medicare Part D plan's Second Phase or Initial Coverage Phase once your retail drug costs exceed the Initial Coverage Limit. And when you leave your Initial Coverage Phase, you will enter the Coverage Gap (Donut Hole) where the cost of your formulary medications can actually increase, decrease, or stay the same - depending on your Medicare plan, your cost-sharing, and the drug's retail price.

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 until the end of the year. Keep in mind that beginning in 2025, you do not get credit toward your out-of-pocket spending for the brand-name drug manufacturer donut hole discount because there will be no donut hole.

Remember: The Donut Hole entry point has changed each year.

The amount of prescriptions you can purchase before entering the Donut Hole varied each year with the annual changes to the plan's Initial Coverage Limit.

For example, the 2023 Initial Coverage Limit ($4,660) was slightly less than 2024 ($5,030), therefore, in 2024, you can spend slightly more before entering the Donut Hole.

Please note that each year, some Medicare Advantage plans provide prescription coverage with different Initial Coverage Limit values.

In other words, depending on your Medicare prescription drug coverage (stand-alone Medicare Part D plan or Medicare Advantage plan that includes drug coverage), you may enter the Donut Hole or Coverage Gap a little earlier than someone who uses the same medications, but is in another Medicare plan.

For more assistance, you can use our Donut Hole Calculator or PDP-Planner.com to illustrate when you will enter the donut hole. For example, if you have 2024 monthly retail drug expenses of $550, you would enter the donut hole in month 10 (or October if your plan started on January 1st).

You can read more in our articles:

» Understanding the 2024 Medicare Part D Donut Hole, and

» Will you enter the 2024 Medicare Part D Coverage Gap or Donut Hole