The Part D prescription drug “Donut Hole”- is the nickname for the Coverage Gap, the time in which prescription drug subsidies are reduced- has new changes for 2022. For this year, the Donut Hole starts when you reach $4,430 in prescription costs. Part D members will also have a new maximum Part D deductible of $480 in 2022 (up from $445 in 2021). See below for details on exactly how Medicare Part D prescription drug coverage has changed for 2022.

If you hit the Medicare Part D Donut Hole, you will usually be paying 25% of your drug costs

What Is the Medicare Part D Donut Hole and how has it changed in 2022?

When Medicare Part D beneficiaries reach the Coverage Gap, also known as the Donut Hole, their prescription drug coverage is reduced and they have to pay more out-of-pocket. Members must pick up a larger portion of costs for prescriptions during the Coverage Gap in the form of coinsurance. The Part D Donut Hole coverage officially closed in 2020 but the Coverage Gap has still remained, so most people still call it the Donut Hole.

How Part D and the Donut Hole works

There are four stages to Medicare Part D coverage. The amount you pay for medicines and the amount your plan covers changes from one stage to the next as your drug expenditures accumulate throughout the year.

1) Deductible Stage: 

You pay all your drug expenses up to the plan’s deductible maximum of $480, if applicable (not all plans have deductibles and some waive the deductible for generic drugs).

2) Initial Coverage Stage: 

In this stage, your Part D coverage begins and your drug plan starts to cover some, most, or all of your prescription costs. You pay a certain amount either as a copay (like $5 flat fee), or coinsurance (like 15% of the cost of the drug), for your prescriptions while in this stage.

3) Donut Hole Stage:

Officially called the Coverage Gap, the Donut Hole stage begins once you and the plan reach $4,430 in prescription costs and ends once you have spent $7,050 in 2022.

You will pay 25% coinsurance for covered generic and brand-name medications while you are in the Coverage Gap.

4) Catastrophic Coverage Stage: 

You will pay roughly 5% for all drugs in the Catastrophic Coverage Stage. In 2022, the Catastrophic Coverage Stage begins after you have spent $7050 in out-of-pocket expenses. In this phase, you will pay either $3.95 or 5% coinsurance for generic drugs, or $9.85 or 5% coinsurance for brand name drugs (whichever number is larger).

Source

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