The Donut Hole (or Coverage Gap) is a
term used to describe a "gap" or pause in your Medicare Part D prescription drug coverage where - prior to 2011 - you were 100% responsible for the cost of your prescription drugs -
unless your Medicare Part D plan provided additional coverage while in the Donut Hole.
Before 2011, the Medicare Part D Coverage Gap or Donut Hole was actually similar to a second deductible in an insurance policy where, after receiving a certain level of coverage, you were, once again, responsible for paying your own drug coverage until you reached the Catastrophic Coverage portion of your Medicare Part D plan or Medicare Advantage plan that included drug coverage (MAPD).
However, with the introduction of the Donut Hole discount
in 2011, you are now responsible for only a portion of your own drug coverage in the Donut Hole.
2020 and beyond: Closing the Donut Hole
In 2020, the Coverage Gap will be considered "closed" when both generic and brand-name drugs will cost Medicare Part D plan members 25% of the retail drug price (so you will pay $250 for a medication with a $1,000 retail cost) until reaching Catastrophic Coverage.
In 2018, President
Trump signed the Bipartisan Budget Act of 2019 (Pub.L. 115-123
) that effectively "closes" the Coverage Gap for brand-name drugs, with the brand-name Donut
Hole discount increasing to 75% in 2019 (one year earlier than planned). The Coverage Gap for generic drugs
was not affected by the Act and "closes" as planned in 2020 when all generic formulary drugs will also receive a 75% discount.
Help with planning for your Donut Hole
To help you visualize the phases of your Medicare Part D prescription drug plan coverage, we have a Donut Hole Calculator or PDP-Planner
online illustrating the changes in your monthly estimated costs based on the established standard Medicare Part D plan limits mentioned above.
We also have several examples online to help you get started with PDP-Planner. You can click here for a 2020 example
of a Medicare beneficiary with relatively high monthly prescription drug costs of $800 per month
resulting in estimated annual out-of-pocket costs of $2,667
- you can then change the monthly drug cost to whatever you wish to estimate your out-of-pocket cost.