Medicare Part D’s Donut Hole can leave significant costs for those 65 and over. However, the percentage you pay out of pocket each year has been decreasing for a few years now, with no more planed reductions in 2020.
What does the Donut Hole have to do with Medicare?
Before we can discuss the “Donut Hole” we must first understand a few things. The donut hole only applies to Medicare Part D drug plans. As you recall, Part D is Medicare’s prescription drug program. You purchase Medicare Part D separately.
What is the Donut Hole?
The Donut Hole is a nickname for the coverage gap where you usually pay higher prices for your prescription drugs at the pharmacy.
In 2020 and onward the Donut Hole will work this way:
- It starts after you spend $4,020 toward drugs.
- You pay 25% of brand-name costs
- You pay 25% of generic costs
- It closes after you have spent $6,350 towards drugs.
After spending $6,350 towards drugs, you pay only 5% of drug costs for the rest of the year. This is called “catastrophic coverage.”
Do you have to pay the Donut hole?
No. Many people never spend enough on drugs to reach the Donut hole zone. If you have low cost plans, this donut hold regulation may not affect you.
How to purchase Medicare Part D
If you have Medicare Part A and B or the Original Medicare and Medigap combined, prescriptions aren’t covered so you’ll want to enroll in a Part D drug plan. The other option is to choose a Medicare Advantage which usually offers Rx coverage.