The Medicare Donut Hole
The “donut hole” is the commonly used term for the Coverage Gap in Medicare Part-D prescription plans. The coverage gap itself is quite complicated so we’ve included a direct link to the Medicare.gov website for a complete explanation.
In general, the way that the donut hole works is that once you’ve spent a certain amount each year on prescriptions, the amount you pay may increase. If you spend enough additional money on prescriptions, you may be able to enter the “Catastrophic” Phase where costs go down for the rest of the year.
The size of the donut hole has been shrinking for several years. Starting with Plan year 2019, Part-D enrollees will pay 25% of the cost of all of their prescriptions from the time they enter the gap until they reach catastrophic coverage.
Here’s an example of how the donut hole can impact someone enrolled. Let’s assume a generic drug costs $20 at retail and that the drug is listed as Tier 1 on an enrollee’s plan with a co-pay of $2.00 (which happens to be 10% of the retail cost). Once that person enters the donut hole, that particular generic drug will now cost $5.00, which is 25% of the retail cost. This is only a generalized overview; many factors can impact the actual cost on a plan-to-plan basis.
Some plans have coverage gap bypass features, meaning that prescriptions in some categories never are impacted by the higher costs in the gap. In the example above, if the Tier 1 generic had a coverage gap bypass feature, then the enrolled person would continue to pay the regular copay of $2.00 instead of $5.00 even though he or she actually was caught up in the donut hole.
This confusing mechanism is another important reason why most Medicare beneficiaries should consider utilizing the services of an experienced, licensed insurance agent or broker with extensive knowledge of Medicare Part-D plans.
Our agency represents all Medicare Advantage plans and several Part-D prescription plans in both southern and northern Nevada. If you would like for us to assist you in determining which Plans may be available in your area, you can contact us by phone at the number listed at the bottom of this page. Or if you prefer, you can use the adjacent form and submit a request for additional information via a secured link on our site.