Avoiding the Medicare Part D Coverage Gap

3 Simple Steps to Stay Out of the Medicare Donut Hole

Updated on: November 27, 2019

Originally posted on: November 1, 2016
Express Scripts Medicare Advisor
Ms. Kyong specializes in personal finance issues for Medicare recipients. Topics include managing healthcare costs in retirement.

In a standard Medicare Part D plan, the third stage of coverage is the Coverage Gap (also known as the “Donut Hole”). During this time you will pay more for your brand-name and generic medications. You’ll want to avoid entering the Gap, or at least delay your entry for as long as you can. To learn more about the Coverage Gap and the other coverage stages for Medicare Part D plans, please watch this video.

Many seniors never enter the Coverage Gap. However, for those who take multiple medications, the Coverage Gap may be unavoidable. In 2020, you will enter the Coverage Gap when your total Part D prescription drug costs exceed $4,020. These costs include what you pay (that includes your deductible and your copay) and what the plan pays for the drugs covered through a Part D plan.

New in 2020, the agency that regulates Medicare (The Centers for Medicare & Medicaid Services, or CMS) established a set of rules that give you access to discounts for the medications you’ll purchase while in the Coverage Gap. More information about Medicare Part D 2020 changes is available here.

Through this discount, your copay will never exceed 25% of the total cost of the medication.

Coverage Gap Medication Discount Examples

  • Brand-name medication: If your medication has a retail cost of $100, the drug manufacturer pays $70, you pay $25, and your plan pays $5.
    • True out-of-pocket (TrOOP): Out of the $100 cost, $95 will count toward meeting your TrOOP.
  • Generic medication: If your medication costs $100, you will pay $25.
    • TrOOP: Out of the $100 cost, the $25 you pay will count toward meeting your TrOOP.


Want to know more about how to determine your TrOOP and how it will impact your budget? Read this helpful article.

There are several cost-saving approaches you can take to help delay, avoid or manage your out-of-pocket costs while in the Coverage Gap.

  • Whenever possible, use generic instead of brand-name drugs since your copay or coinsurance costs will be lower. A generic is FDA-approved to be just as safe and effective as the brand-name drug to treat the same condition.
  • If your plan offers preferred pharmacies in their network, try to fill your prescription at this type of pharmacy. A preferred pharmacy will offer lower copayments or coinsurance than at a standard pharmacy.
  • If you’re taking a medication for a chronic condition, a home-delivery pharmacy may also save you money. In many plans home delivery is also considered a preferred pharmacy. You can typically get a 90-day supply of the drug for less than you would pay for three 30-day prescriptions at a retail pharmacy. This will depend on the plan you choose.

Be sure to check your plan for any changes that may occur from year to year before enrolling. It’s also a good idea to research other plans each year to make sure your plan is still the best option for the medications you take.