Do I need supplemental coverage in the Donut Hole (or Coverage Gap)?
Generally speaking, No -- unless you use very expensive medications. Having supplemental prescription coverage in the Donut Hole used to be important -- back when beneficiaries were 100% responsible for their prescription costs in the Coverage Gap. However, with the closing of the Donut Hole in 2020, everyone who enters the Coverage Gap receives a 75% discount on all formulary medications. Thus making supplemental coverage in the Donut Hole less important.Also, many Part D plans only have supplemental coverage for a limited number of generics in the donut hole!
If my Part D plan has supplemental Gap coverage, do I get the Donut Hole discount?
A partial discount on brand-name drugs. Only the 70% pharmaceutical manufacturer discount for your brand-name formulary drug purchases. If your Medicare Part D plan (PDP) (or Medicare Advantage plan (MAPD)) includes supplemental Donut Hole coverage for brand-name drugs, you will receive an additional 70% Donut Hole discount after your plan’s Gap coverage has been applied to the retail price of the drug (that is, the 70% pharmaceutical industry discount for brand-name drugs will apply to the remaining amount that you owe after your Medicare plan's Gap Coverage is applied).So, if your Medicare Part D plan offers 60% coverage on brand-name drugs in the Coverage Gap (you pay 40% coinsurance) and you purchase a brand-name formulary prescription that has a retail price of $100, the cost of your prescription after your plan’s savings is $40.
The 70% pharmaceutical manufacturer discount is then applied to your $40 portion so that you only pay $12.00. Please notice that only the pharmaceutical industry's portion of the Donut Hole Discount is applied since the Medicare Part D plan is already providing additional Gap coverage.
However, the entire $40 coinsurance paid by you and the pharmaceutical manufacturer will count toward your total out-of-pocket spending (TrOOP) limit and help you get out of the Coverage Gap a little faster.
For more details, see our FAQ:
- Do I get the Donut Hole discount if my Medicare plan includes Gap Coverage?