Donut Hole/Coverage Gap

What is a Donut Hole (Coverage Gap)?

Hi, you may be wondering, what is a donut hole? The Medicare Part D "donut hole" is a gap in coverage occurring in some Medicare Part D prescription drug plans. The donut hole, also called the coverage gap, occurs when you reach your plan's initial coverage limit and before you reach your plan's out-of-pocket threshold. The initial coverage limit is the maximum amount a Medicare Part D plan pays for your medications during the year. Once your total drug costs reach the initial coverage limit, you enter the donut hole.

While in the donut hole, you are responsible more of the cost for your medications. The amount you are responsible for paying during the donut hole depends on your Part D plan and can vary based on the specific drug and the individual's location.

The donut hole ends when your total out-of-pocket costs, including your deductible, copayments, and coinsurance, reach the out-of-pocket threshold. Once the out-of-pocket threshold is reached, your Part D plan starts covering a larger part of the cost of your medications.

With the passage of the Affordable Care Act (ACA) in 2010, the donut hole has been gradually closed. With the ACA, the amount people are responsible for paying during the donut hole has been gradually decreasing and the donut hole was scheduled to close completely in 2020.

So, the Medicare Part D "donut hole" is a gap in coverage occurs in some Medicare Part D prescription drug plans. This is after a person has reached their plan's initial coverage limit and before they reach their plan's out-of-pocket threshold. In the donut hole, a person is responsible for a larger part the cost of their medications. Since the passage of the Affordable Care Act in 2010, the donut hole has been gradually closing since and was scheduled to close completely in 2020.

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