Part D: What Is the Medicare Donut Hole?

Part D: What Is the Medicare Donut Hole?

If this is your first year on Medicare, or you are new to Part D prescription drug coverage, you may be concerned about the potential coverage gap called the “donut hole.” This donut hole is a temporary gap in coverage that occurs after you and your insurance company have spent a certain dollar amount on prescription medications during the year, and before you reach the out of pocket limit that will trigger catastrophic coverage.

In 2021, once you reach a total of $4,130 spent on covered drugs (by both you and your insurance company), you will enter the coverage gap. Once you reach this “hole” in your coverage, you will only pay 25% of the cost of your insurance company’s brand-name or generic drugs.

Once you are in the gap, how do you get out of it? You will get out of the donut hole when you’ve reached an out-of-pocket limit. The following items all count toward you getting out of the coverage gap: your yearly deductible, coinsurance, and copayments; the discount you get on brand-name drugs in the coverage gap; and what you pay in the coverage gap. Please note that your prescription drug plan premium and what you pay for drugs that are not covered by your PDP do not count toward getting you out of the coverage gap. When your total out-of-pocket expenses reach $6,550 in 2021, you will qualify for “catastrophic coverage” and will only be responsible for a small coinsurance or copayment amount for the remainder of the year.

It's important to plan ahead and consider your personal needs when choosing prescription drug coverage. If you have Original Medicare, you can enroll in a stand-alone Prescription Drug Plan (PDP). As an alternative to Original Medicare, you can enroll in a Medicare Advantage (MA) plan. MA plans are required to provide the same Part A and Part B benefits as Original Medicare, but many provide additional benefits, such as prescription drug coverage. Plans vary in costs and benefits, so take advantage of online comparison sites that will allow you to check a plan’s formulary, or list of covered drugs, before enrolling.

Medicare has neither reviewed nor endorsed this information.