No.  Your $5,000 total out-of-pocket spending limit (2018 TrOOP) only includes the portion of your $3,750 Initial Coverage Limit that you actually paid. The portion paid by your Medicare Part D plan for your medications does not count toward your $5,000 TrOOP.  Therefore, you cannot simply subtract the two numbers to determine how much you will need to spend before leaving the Donut Hole.

Here is a bit of background when considering the Coverage Gap:

• The Initial Coverage Limit (ICL) -- $3,750 in 2018, is used to calculate when you enter the Coverage Gap - and this is the retail value of your formulary drug purchases - not what you paid, but the retail value.
  
  
• You will stay in the 2018 Donut Hole until your total out-of-pocket spending (not including monthly plan premiums) exceeds the $5,000 out-of-pocket threshold (TrOOP) - what you actually pay plus what anyone pays on your behalf (as noted below, this includes the pharmaceutical manufacturer Donut Hole discount). 
  
  
• You get credit toward the $5,000 TrOOP for the 50% drug manufacturer's portion of the 65% brand-name drug discount you receive while in the Donut Hole (you can click here to read more).  In other words, you pay 35% of the brand-name drug's retail cost, but receive credit for 85% of the cost toward reaching the TrOOP limit - so for a $200 drug, you pay $70 and get $170credit toward meeting your TrOOP.
  

We use two different (but related) numbers to define your Medicare Part D drug plan’s Donut Hole or Coverage Gap:

(1) Your Donut Hole entry point or your Initial Coverage Limit (ICL): The 2018 Initial Coverage Limit is $3,750.  This is the total retail value of your drug purchases before entering the Donut Hole - so the $3,750 includes what you have spent on medications plus what your Medicare plan has contributed toward your medications and determines when you enter the Donut Hole.  Again, when the total retail cost of your drug purchases exceeds $3,750, you go into the 2018 Donut Hole.

For example, if you are in your Medicare Part D plan’s Initial Coverage Phase and purchase a medication with a $100 retail cost, and only pay a $30 co-payment out of your own pocket (your plan pays the other $70), the total $100 counts toward your $3,750 Initial Coverage Limit.

(2) Your Donut Hole exit point or Total out-of-pocket (TrOOP) spending: After your actual spending for covered medications has reached $5,000, you exit the 2018 Donut Hole.  Although you receive a 65% brand-name discount count in 2018, only the portion paid by you, and the portion paid by the brand-name drug manufacturer (50%) count toward meeting the total out-of-pocket spending amount. The additional 15% brand-name drug discount paid by your plan and the 56% generic drug discount paid by your plan do not count toward TrOOP.


And, if you are in your Medicare Part D plan’s Coverage Gap and purchase a brand-name medication with a $100 retail cost, you receive the Donut Hole discount of 65% and only pay $35 out of your own pocket, but you get $85 credit toward the $5,000 Donut Hole exit point (the 35% you paid, plus the 50% paid by the pharmaceutical manufacturer).

If the $100 medication you purchased in the Donut Hole was a generic drug, you would pay $44 dollars (receive a Donut Hole discount of 56%) and you would get $44 credit toward meeting the $5,000 Donut Hole exit point or out-of-pocket threshold (the actual amount you spent).


* Retail Cost toward ICL
** $30 co-pay (Retail Cost toward ICL)
*** 65% Brand-Name Donut Hole Discount in 2018
**** 56% Generic Donut Hole Discount in 2018
***** 5% of retail or $8.35 for brand-name medications, whichever is higher (80% paid by Medicare, 15% paid by Medicare plan, and around 5% by plan member)

So how much can I expect to spend while I am in the 2018 Donut Hole?

Around $3,759 to $4,100 out-of-pocket. Once your reach the 2018 Donut Hole or Coverage Gap, the amount of money you actually need to spend out-of-pocket before entering Catastrophic Coverage will depend on your chosen Medicare Part D plan (PDP) or Medicare Advantage plan (MAPD).

A small piece of trivia: Based on past experience, Medicare expects you to purchase a combination of generic and brand drugs with a retail value of around $8,418 (and that you will use a mix of 90% brand-name drugs and 10% generics) before meeting your $5,000 limit - and exiting the Donut Hole.

Deductible Example 1 – you have the standard $405 deductible – and your drug cost is about 25% of retail.
If your Medicare drug plan follows the standardized or model Medicare Part D plan, you will first pay 100% of a $405 deductible. After the deductible, the remaining amount you will spend to reach the Initial Coverage Limit is $3,750 - $405 = $3,345 and you will pay 25% of this $3,345 total or $836.25. This means that, if your Medicare plan has an initial deductible of $405, you will pay the first $405 plus pay the $836.25 to reach the Donut Hole – for a total of $1,241.25.

Bottom Line: When you enter the 2018 Donut Hole, you will need to personally spend $5,000 – $1,241.25 or about $3,758.75 (rounded to $3,759) to exit the Donut Hole.

You enter the Donut Hole:
Total drug costs = $3,750
Total out-of-pocket costs = $1,241.25 (because of the initial deductible)

You exit the Donut Hole:
Total drug costs = about $8,418 (estimated by Medicare)
Total out-of-pocket costs = $5,000

Amount spent out-of-pocket while in the Donut Hole: about $3,759

Deductible Example 2 – you have a $0 deductible – and your drug cost is about 25% of retail.
If your Medicare Part D plan does not have the standard $405 initial deductible, but instead has the $0 deductible, you will actually pay slightly more in the Donut Hole before meeting your $5,000 TrOOP and exiting the Donut Hole. If you have a $0 initial deductible, you enter the 2018 Donut Hole when you have spent about $937.50 out-of-pocket, assuming your Medicare Part D plan does not have an initial deductible ($0 deductible) – in other words, you pay around 25% of $3,750 or $937.50. So when you enter the 2018 Donut Hole and your plan has a $0 deductible, you will need to personally spend $4,063 ($5,000 – $937.50) to exit the Donut Hole. Again this number is not “the total drug cost”, but what you actually spend to exit the Donut Hole.

You enter the Donut Hole
Total drug costs = $3,750
Total out-of-pocket costs = $937.50

You exit the Donut Hole
Total drug costs = about $8,418 (estimated by Medicare)
Total out-of-pocket costs = $5,000

Amount spent out-of-pocket while in the Donut Hole: about $4,063