Once you spend a certain amount of your Part D prescription drugs, you enter a phase that is sometimes called the "donut hole" or coverage gap.
If you find yourself paying a lot for medicines, each year, check out whether you may be eligible for several prescription savings programs.
People with 'Extra Help' see significant savings on their drug plans and medications at the pharmacy, and don't fall into the donut hole.
What is the Medicare “donut hole”?
The Medicare 'donut hole' is another name for what is sometimes called the Medicare Part D coverage gap. You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit beyond your Initial Coverage Period threshold. You reach the Medicare Part D 'donut hole' for 2022 when you and your plan have paid $4,430 on your drugs.
Didn’t the Medicare Part D 'donut hole' go away?
Yes and no. Prior to 2019, if you reached the coverage gap, you would have to pay 100% of your prescription drug costs in that period until you met the Catastrophic Coverage Period spending threshold.
When the Affordable Care Act was passed in 2010, it included a gradual “closing” of the donut hole. But “closing” does not mean that people reaching the donut hole do not pay anything for their drugs—it means that plans and pharmaceutical companies pick up more of the tab. Just like in the Initial Coverage Period, when you enter the donut hole you will be responsible for paying 25% of the costs of your medications.
Once you have spent $7,050 out of pocket in 2022 on your prescription drug costs, you enter the Catastrophic Coverage Period. In this phase, you will pay 5% of the cost for each of your drugs, or $3.95 for generics and $9.85 for brand-name drugs (whichever is greater).
How can I avoid the Part D donut hole?
Here's how you can try to avoid the donut hole altogether and get financial assistance if you do fall into the coverage gap.
It’s important to shop around to find the best drug plan that suits your needs. The Annual Enrollment Period for Medicare Advantage and Part D plans runs October 15 – December 7. During this time, people with Medicare can join, switch, or leave plans. Use our Part D plan checklist to get a list of questions to ask before selecting prescription drug coverage. Aside from looking at costs, you also want to make sure that you choose a plan that covers all/most of your medications and makes it convenient for you to obtain them.
Outside of the Annual Enrollment Period, you may qualify for a Special Enrollment Period to switch drug plans if you meet certain circumstances, such as moving or losing other drug coverage.
If you have limited income and resources, you may want to see if you qualify to receive Medicare's Extra Help/Part D Low-Income Subsidy. People with Extra Help see significant savings on their drug plans and medications at the pharmacy, and do not fall into the donut hole. See if you qualify and apply today.
How else can I save money on drug/prescription costs?
There are several options that may be available to help your pay for your prescriptions:
- State Pharmaceutical Assistance Program (SPAP): Some, but not all, states have a SPAP to help people pay for their medications. Sometimes the SPAP will contribute an amount toward your Part D premium, or it may work to offset your prescription costs.
- Patient Assistance Programs: Brand-name drug manufacturers often have these programs to provide discounts or no-cost medications to those who qualify. You may have to provide proof of income and spending on the prescription to be able to take advantage of these programs.
- Disease Funds: Disease funds are supported by charitable groups and help to pay for medications and treatments for a specific disease or condition.
- Generics: Talk to your doctor about whether any generics may be a good substitute for expensive brand-name drugs. If your medication is in a higher cost tier or not covered on your plan’s formulary (approved drug list), you may want to see if you can ask for an exception to get the plan to cover it completely or at a lower cost.
- "Best" Price: Another strategy is to ask your pharmacist for the “best” price for the prescription. Sometimes costs for drugs may be less if you do not use your insurance. Be mindful that any drug you purchase outside of your insurance will not automatically count toward satisfying your deductible, or getting you out of the donut hole. Contact your plan to determine if the drug purchases you made outside of your Part D plan can be counted toward your true out of pocket costs and/or are eligible for reimbursement.
You can use our free, comprehensive screening tool BenefitsCheckUp® to see if you qualify for any of these and other money-saving benefits.