Dear Marci,
I recently got onto a Part D drug plan and am concerned about the donut hole. What should I know about it?
- Lisa (Clinton, NJ)
Dear Lisa,
The donut hole—also called the coverage gap—can be very confusing! Here’s what you need to know:
There are four phases of Part D coverage in 2024: the deductible, initial coverage period, coverage gap (or donut hole), and catastrophic coverage. During the deductible, you are responsible for the full cost of your medications. After you spend a certain amount, set by the plan, you reach the initial coverage period, where your plan pays a portion of your drug costs, and you pay a copay or coinsurance. After your total drug costs (what you have paid and what the plan has paid) reach a certain amount ($5,030 for most plans in 2024), you then enter the donut hole. (Note: If you have Extra Help, the following doesn’t apply to you, as you won’t have a donut hole.)
Once in the donut hole, you’ll be responsible for 25% of the cost of your drugs. You may notice a difference in what you paid for your drugs during your plan’s initial coverage phase and the donut hole. For example, if your drug costs $100 and you paid your plan’s $15 copay while in the initial coverage period, you’ll begin paying $25 for the same drug once you’ve entered the donut hole.
The donut hole phase ends when you’ve reached an out-of-pocket amount of $8,000 for covered drugs. This will put you into the next phase, called catastrophic coverage, during which you’ll have no cost-sharing for your drugs for the rest of the year.
Out-of-pocket costs that count toward this $8,000 limit include:
Amounts you paid during the deductible period
What you paid during the initial coverage period
Almost the full cost of brand-name drugs (including the manufacturer’s discount) purchased during the coverage gap
Amounts paid by others (family members, charities, and other persons on your behalf)
Amounts paid by State Pharmaceutical Assistance Programs (SPAPs), AIDS Drug Assistance Programs, and the Indian Health Service
Some costs do not count towards the $8,000 limit.
These include:
Monthly premiums
Any amount your plan pays toward drug costs
Non-covered drug costs
The cost of covered drugs from pharmacies outside your plan’s network
The 75% generic discount
Your plan should keep track of how much money you’ve spent out of pocket for covered drugs and your progression through coverage periods. You can find current information in your monthly statements!
I hope that helps!
-Marci
Article Submitted by:
Stephanie Kirk, Owner & President, and Medicare Specialist
JC Madison Inc.
360-779-1082
18887 Highway 305, Suite 300, Poulsbo
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