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If I reach the Coverage Gap and get a Donut Hole Discount on my brand-name drugs purchases, do I still get full retail credit toward meeting my Donut Hole exit point?


No, not quite full retail credit - but credit for 95% of the retail cost on brand-name drug purchases.

If you exceed your Medicare Part D prescription drug plan's Initial Coverage Limit ($4,130 in 2021) and enter the Donut Hole portion of your Medicare plan, you will receive a 75% discount on the retail price of all formulary drug purchases (brand-name drugs and generic drugs).

You get credit toward exiting the Donut Hole for the 25% that your paid, and on your brand-name drug purchases, you will receive an additional credit for the 70% brand-name drug manufacturer discount.  You do not get credit for the portion of your drug costs paid by your Medicare Part D plan (5% on brand-name drugs or 75% on generic drugs).

2021 Example:
When you exceed your 2021 Medicare Part D prescription drug plan's Initial Coverage Limit of $4,130 and enter the Donut Hole portion of your plan coverage, you will receive a 75% discount on your brand-name drug purchases (you pay 25%).  However, you will actually receive credit for 95% of the prescription drug’s retail price.  In other words, you get credit for what you spend (25% of the drug's retail price), plus you will receive credit for the 70% Donut Hole Discount paid by the brand-name drug manufacturer, totaling 95% of the retail drug cost.

So, if you buy a brand-name medication with a $200 retail cost while in the 2021 Donut Hole, you pay $50 and get $190 credit toward exiting the Donut Hole.  But if you buy a $200 generic drug, you pay $50 and only get credit for the $50 you spend.

The additional “discount” is paid by your Medicare Part D plan (5% on brand-name drugs or 75% on generic drugs) and therefore does NOT count toward exiting the Donut Hole or reaching your out-of-pocket costs (TrOOP).





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