What is the Part D Coverage Gap (“donut hole”)? What does it cost?

Centers for Medicare & Medicaid Services (CMS):

The Federal agency that oversees Medicare and Medicaid.

In a standard Medicare Part D plan, the Coverage Gap, also known as the “donut hole,” is the stage of coverage where you pay a higher percentage of the cost of prescription drugs. In 2015, you enter the Coverage Gap once your Part D total drug costs (your deductible plus your copayments and what the plan spends in the initial coverage stage) exceed $2,960. You will pay 45% of the cost of covered brand-name drugs and 65% of the cost of covered generic drugs. If your out-of-pocket costs reach $4,700 in this stage, you will move into the last stage of coverage, the Catastrophic Coverage stage. In this last stage, the plan pays most of the cost of your drugs for the remainder of the calendar year. Not everyone enters the coverage gap because their drug costs won’t be high enough. Some plans offer additional gap coverage beyond the standard benefit however they may charge a higher premium. As part of the Affordable Care Act, the Coverage Gap stage is being phased out and will be eliminated completely by 2020.

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Posted on: August 1, 2014
Vice President of Medicare Solutions

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