Medicare Part D’s Donut Hole is something many people talk about but nobody really understands. We will get into the details below but basically it is the percentage you may pay for certain drugs at certain times of the year. The good news is that it has been decreasing for the past few years now and there are no more planed changes after 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 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. The proper name for this period where you may pay higher for drugs is called the Drug Coverage Gap but many people still like to call it the donut hole. The Coverage Gap percentage used to change each year but after 2020 the Donut Hole amounts will stay the same. Here is how it will work now and moving forward:
- 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 drug needs, this donut hole 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. You can learn about how to enroll in Medicare Part D here. The other option is to choose a Medicare Advantage which usually offers Rx coverage.