Does the $4,700 Donut Hole limit include the $2,960 Initial Coverage Limit so you only have to pay another $1,740 ($4,700-$2,960) before leaving the Gap?

No. Your $4,700 total out-of-pocket spending limit (2015 TrOOP) includes the portion of your $2,960 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 2015 Donut Hole until your total out-of-pocket spending (not including monthly plan premiums) exceeds the $4,700 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).

To keep things "simple" we use two different numbers to define your Medicare Part D drug plan’s Donut Hole or Coverage Gap:

(1) The Donut Hole entry point or The Initial Coverage Limit (ICL): The $2,960 is your 2015 Initial Coverage Limit or total retail value of your drug purchases - so this $2,960 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. When the total retail cost of your drug purchases exceeds $2,960, you go into the 2015 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 $2,960 Initial Coverage Limit.

(2) The Donut Hole exit point or Total out-of-pocket (TrOOP) spending: After your actual spending for covered medications has reached $4,700, you exit the 2015 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 $4,700 Donut Hole exit point.

When you purchase a formulary medication with a $100 retail cost and a $30 co-pay in 2015
Retail Cost	You Pay	Medicare Plan Pays	Pharma Mnfgr Pays	Gov. pays	Amount toward your TrOOP
Initial Deductible *	$100	$100	$0	$0	$0	$100
Initial Coverage Phase **	$100	$30	$70	$0	$0	$30
Coverage Gap - brand-name ***	$100	$45	$5	$50	$0	$95
Coverage Gap - generic ****	$100	$65	$35	$0	$0	$65
Catastrophic Coverage (generic drug) *****	$100	$5	$15	$0	$80	$5

* Retail Cost toward ICL
** $30 co-pay (Retail Cost toward ICL)
*** 55% Brand-Name Donut Hole Discount
**** 35% Generic Donut Hole Discount
***** approx. 5% of retail or $6.60 for brand medications, whichever is higher (80% paid by Medicare, 15% paid by Medicare plan, and around 5% by plan member)

Now when you are in the 2015 Donut Hole and you buy the same $100 medication, and your plan does not have any Donut Hole coverage, you will get a 55% discount on all brand-name drugs bought in the Donut Hole, or a 35% discount on generic drugs purchased in the Donut Hole.

If your $100 medication was a brand-name drug, then you will pay only $45 - but, you will get credit for the $95 toward meeting your $4,700 out-of-pocket threshold or Donut Hole exit point. This $95 TrOOP credit represents the $45 that you paid and the $50 that was paid on your behalf by the brand-name drug manufacturer. You do not get credit for the $5 that was paid by your Medicare Part D plan.

If the $100 medication was a generic drug, you would pay $65 dollars and you would get credit toward meeting the $4,700 Donut Hole exit point or out-of-pocket threshold only for the actual $65 you spent.