Understanding the Medicare Part D Donut Hole (Coverage Gap)
Learn what the donut hole means, how the coverage stages work, and what to review so you can plan ahead and avoid surprises.
Quick takeaway
Medicare Part D has a unique stage called the “donut hole” (coverage gap). It’s a temporary phase where your share of prescription costs may change after your total drug spending reaches a certain amount.
Understanding the Coverage Gap
Medicare Part D prescription drug coverage typically moves through stages during the year: the deductible, initial coverage, the coverage gap (donut hole), and catastrophic coverage.
The donut hole is the stage where your share of drug costs may change. Knowing when you might enter this stage can help you plan your budget and explore assistance programs if you need help with prescription expenses.
What Exactly Is the Part D Donut Hole?
The donut hole (coverage gap) begins after you move through the initial coverage stage. It’s not tied to a calendar date— it’s based on the total cost of your covered prescription drugs during the year.
Once your total drug costs reach a Medicare-set amount, you may enter the coverage gap. During this stage, your out-of-pocket share for covered drugs often changes to a percentage of the drug’s price.
Breaking It Down with an Example
Let’s imagine that in 2024, you’re prescribed a medication priced at $220. During the initial coverage stage, your copay might be around $12 each time you refill the prescription (plan-dependent).
After your total drug costs reach the yearly limit and you enter the donut hole, the way you share costs can change. Instead of a fixed copay, you may be responsible for 25% of the medication’s cost—$55 for a $220 prescription.
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Navigating Through the Donut Hole
The coverage gap continues until your out-of-pocket prescription drug costs reach another Medicare-set amount. After that threshold, you move into the catastrophic coverage stage, where your cost-sharing may be lower for the rest of the year.
Example (2024): This transition may occur once out-of-pocket medication expenses reach $7,100. (Dollar amounts can change by year.)
Assistance for Those Struggling with Drug Costs
Managing higher prescription costs can be challenging, especially if you take multiple medications. If prescription expenses become difficult to afford due to limited income or resources, help may be available.
The Extra Help program (Low-Income Subsidy / LIS) may help eligible individuals pay for Part D premiums, deductibles, and copayments. State programs and other resources may also be available depending on where you live.
The Bigger Picture
The donut hole is an important Part D feature to understand because it can affect your out-of-pocket costs. Even though the coverage gap is temporary, its financial impact can be meaningful—especially for people who rely on ongoing medications.
The structure and dollar amounts may change from year to year. Reviewing your plan materials annually helps you stay informed.
What If I Cannot Afford the Cost of the Drug Plan?
If you cannot afford Medicare prescription drug coverage due to limited income or resources, you may still have options. You may qualify for financial assistance that helps reduce Part D costs.
Extra Help is designed to help eligible individuals with Part D costs, and some states offer additional programs that may reduce drug expenses or help with premiums and deductibles.
Conclusion
The Medicare Part D donut hole can feel confusing, but understanding how the stages work can help you prepare for potential changes in prescription costs throughout the year. Staying informed, planning ahead, and exploring assistance programs can support more confident decisions.
Always review your plan’s formulary and coverage documents for the most accurate details.