If you choose to have Original Medicare with Medicare Part D added, you’ll receive prescription drug coverage through Medicare Part D. However, there can sometimes be a gap in the coverage of your prescriptions.
This gap is known as the “donut hole,” and it’s a period of time where you pay out-of-pocket for your medications. However, you don’t pay the full amount, and once your out-of-pocket costs hit a specific level Medicare will resume coverage.
What is the Medicare donut hole? This page will help you understand the donut hole and how to navigate it.
The Medicare donut hole is a period of time where you’ve reached the limit of your Medicare Part D coverage, but haven’t hit the “catastrophic coverage” level where Medicare resumes assisting you with your prescription drug coverage.
With Medicare Part D, the first portion of the year you’ll be paying toward your deductible. The deductible varies but can be up to $445 in 2021. Once you reach your deductible, your drug plan will kick in and you’ll pay your copayment or coinsurance for your medication.
If the amount you and your plan pay toward prescription drugs reaches a certain level, you’ll enter the donut hole. Keep in mind that not everyone gets to the prescription donut hole — the gap was designed to encourage Medicare recipients to seek out lower-cost drugs and generics. The Medicare donut hole in 2021 starts at $4,130.
The coverage gap ends when you reach the catastrophic coverage limit for the year. In 2021, this amount is $6,550.
The good news is that the donut hole essentially closed in 2020, so that even when you hit the coverage gap, you won’t pay more than 25% of the cost of prescription drugs. However, around 95% of the cost will count toward moving you out of the hole.
Medicare drug coverage — Part D — works the same in a Medicare Advantage plan as it does with a "Stand-alone” Part D plan. However, some Medicare Advantage plans offer more generous benefits during the donut hole than a stand-alone Part D plan does.
Understanding your prescription drug coverage is essential so that you know if you’re likely to approach a coverage gap based on the price of your medication. If so, make sure you know what the costs will be during the donut hole period.
There are no Medicare Part D plans — including Medicare Advantage plans — without a coverage gap. However, some prescription plans have additional coverage options during the donut hole.
For instance, your Medicare Advantage plan might include coverage for some generic medications even in the gap. Or, they may offer some drugs at a lower cost than 25%. It all depends on your plan and provider.
The best way to avoid the donut hole is to work with your doctor to keep the cost of your medication low. If that’s not possible, the fact that you will pay no more than 25% of the full cost even in the coverage gap will help ease your mind.
If you’re in the Medicare Part D donut hole, the only way to get out is to spend enough to reach the catastrophic coverage threshold. The good news is that while you’re paying no more than 25% of the cost of the medication, close to 95% of the cost of the drugs is going toward your spending total.
One way to manage the coverage gap “donut hole” is to work with your doctor to find effective low-cost and generic medications that will help you maintain your physical health.
Here are some tips that can help:
Medicare costs can be confusing, especially when there is the possibility of a coverage gap in the middle of the year. Fortunately, even during the Medicare donut hole, you don’t have to pay more than 25% of a prescription drug price, and you may even pay less.
If you’re interested in comparing Medicare plans to make sure your drug coverage meets your needs, talking to a licensed insurance agent can help. Learn more about your options and compare Medicare plans today!