Do I just pay the difference between the $4,850 TrOOP and my $3,310 Initial Coverage Limit to exit the Donut Hole?

No. Your $4,850 total out-of-pocket spending limit (2016 TrOOP) includes the portion of your $3,310 Initial Coverage Limit that you actually paid for your medications - but, you cannot subtract the two numbers to determine how much you will need to spend before leaving the Donut Hole.

You will stay in the 2016 Donut Hole until your total out-of-pocket spending (not including monthly plan premiums) exceeds the $4,850 out-of-pocket threshold (TrOOP)- less any brand-name drug discounts you receive while in the Donut Hole (you can click here to read more).

We use two different 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 $3,310 is your 2016 Initial Coverage Limit or total retail value of your drug purchases before entering the Donut Hole - so this $3,310 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 $3,310, you go into the 2016 Donut Hole.

For example, if you are in your Medicare Part D plan’s Initial Coverage Phase, purchase a medication with a $100 retail cost, and only pay a $30 co-payment out of your own pocket (the plan pays the other $70), you get $100 credit toward your $3,310 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 $4,850, you exit the 2016 Donut Hole. Again, the brand-name discount counts toward meeting this total out-of-pocket spending amount.

Using the same example: If you are in your Medicare Part D plan’s Initial Coverage Phase, purchase a medication with a $100 retail cost, and only pay a $30 co-payment out of your own pocket (the plan pays the other $70), you get $30 credit toward the $4,850 Donut Hole exit point.

And, if you are in your Medicare Part D plan’s Coverage Gap, purchase a brand-name medication with a $100 retail cost, you receive the Donut Hole discount of 55% and only pay $45 out of your own pocket, but you get $95 credit toward the $4,850 Donut Hole exit point (the 45% 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 $58 dollars (receive a Donut Hole discount of 42%) and you would get $58 credit toward meeting the $4,850 Donut Hole exit point or out-of-pocket threshold (the actual amount you spent).

When you purchase a formulary medication with a $200 retail cost and a $30 co-pay in 2016
Retail cost	You pay	Your Medicare plan pays	Pharma Mnfgr pays	Gov. pays	Amount toward your TrOOP
Initial Deductible *	$200	$200	$0	$0	$0	$200
Initial Coverage Phase **	$200	$30	$70	$0	$0	$30
Coverage Gap - brand-name ***	$200	$90	$10	$100	$0	$190
Coverage Gap - generic ****	$200	$116	$84	$0	$0	$116
Catastrophic Coverage brand-name *****	$200	$10	$30	$0	$160	$10

* Retail Cost toward ICL
** $30 co-pay (Retail Cost toward ICL)
*** 55% Brand-Name Donut Hole Discount in 2016
**** 42% Generic Donut Hole Discount in 2016
***** 5% of retail or $7.40 for brand medications, whichever is higher (80% paid by Medicare, 15% paid by Medicare plan, and around 5% by plan member)