In a Medicare Part D plan, Stage 3 is called the Coverage Gap or the “Donut Hole.” You enter this stage after you and your drug plan together have spent an amount set by Medicare for your covered drugs. You continue in this stage until your out-of-pocket costs reach another amount set by Medicare. This amount includes your deductible, coinsurance and copayments in the Initial Coverage stage, the manufacturer’s discount you get on covered brand-name drugs in the Gap; and what you pay for medications while in the Gap. To learn more about the stages of Medicare Part D here.
If you do not join a Medicare Part D plan when you are first eligible for Medicare Part A and/or Part B, you may face a late-enrollment penalty. You will have to pay this late-enrollment penalty for as long as you have Part D coverage. Learn more about the late enrollment penalty.
There are many factors that affect a plan’s premium. It could be the number of drugs that are covered, the number of restrictions placed on those drugs, the deductible amount (if any) and the copayment or coinsurance amount that you will need to pay. Plan’s that offer low premiums are more likely to include less drugs on their formulary – known as a “skinny formulary” – or you may pay more for drugs because they are placed on a higher tier. When determining the cost of a plan you should consider all your costs including the premium, deductible and copayments/coinsurance for your medications. Learn more about Medicare Part D costs.