What is The Medicare Part D Donut Hole?
When you think of a donut hole, you might picture a small, delightful treat. But there's another kind of donut hole related to Medicare, and it's not as sweet. The Medicare donut hole refers to a gap in coverage for prescription medications under Medicare Part D.
What is the Medicare donut hole? The term "donut hole," or "the coverage gap," describes a gap in Medicare Part D plans, which provide prescription medication benefits, and the associated costs for each phase. Let's break down the four phases of Part D and their costs for 2024:
Deductible Phase:
You pay the full cost of your medications.
In 2024, Part D deductibles can’t exceed $545 (some plans have no deductibles).
You're on the edge of the donut.
Initial Coverage Phase:
After the deductible, cost-sharing begins.
Your plan covers 75% of the medication cost, and you pay 25% until reaching a limit.
In 2024, the limit is $5,030, meaning the most you pay is $1,257.50.
Coverage Gap (Donut Hole) Phase:
After reaching the initial coverage limit, you enter the donut hole.
In 2024, you pay no more than 25% of prescription costs.
You can leave the donut hole when out-of-pocket spending reaches $8,000 in 2024.
Catastrophic Coverage Phase:
Reaching catastrophic coverage means your plan covers medications again.
In 2024, no copayments or coinsurance for covered Part D medications for the rest of the year.
Not so Fun Fact: The donut hole was introduced in 2006 to encourage people to be mindful of medication prices.
How to close the coverage gap and get out of the donut hole:
Choose a Part D plan with a formulary that includes your medications.
Shop around for pharmacies with lower costs.
Consider ordering medications by mail.
Use discounts coupons.
Check if you qualify for Extra Help (not available for Medicare Advantage plans).
Can't afford medications? Here's what you can do:
Plan ahead and calculate yearly medication costs.
Use prescription coupon cards for discounts if in the donut hole (You will have to cash pay but this can sometimes still be cheaper).
If costs are similar with insurance and discount coupon, consider using coupons.
If medication expenses are low, consider coupons.
Shop around for the lowest prices using tools like GoodRx, Single Care, manufacturers discount etc.
In 2024, entering the Medicare Part D donut hole happens when total costs hit $5,030. You need to spend $8,000 on covered medications during the year to exit the coverage gap. Use your resources or give me a call and we can explore patient assistance programs to avoid the donut hole.
Remember, Medicare Part D is additional prescription medication coverage for original Medicare or a Medicare Advantage plan without prescription coverage.
References
Cubanski, J., et al. (2023). Changes to Medicare Part D in 2024 and 2025 under the Inflation Reduction Act and how enrollees will benefit. Kaiser Family Foundation.
Medicare Interactive. (n.d.). Extra Help basics.
