What Is the Medicare “Donut Hole”?

Safe Smart Seniors
3 min readJun 22, 2024


In Medicare Part D plans, the ‘Donut Hole’ is a phase where you cover a portion of prescription costs after a set spending limit until reaching the out-of-pocket cap. Brand-name drugs can have discounts, easing the burden during this stage, while generic drugs typically require a 25% cost share.

Key Takeaways

  • Coverage Gap in Medicare Part D plans after exceeding a drug expenditure limit.
  • Requires paying a percentage of drug costs until reaching the out-of-pocket limit.
  • Discounts for brand-name drugs available; 25% cost sharing for generics.
  • Plans like Humana offer extra coverage during the Coverage Gap.
  • Changes in 2025 will eliminate the Coverage Gap, simplifying Medicare plans.

Understanding the Coverage Gap

In the Medicare system, the ‘Donut Hole’ signifies the Coverage Gap stage in Part D plans. This phase kicks in after you’ve spent a certain amount on prescription drugs.

During the Coverage Gap, you’ll be responsible for a percentage of the drug costs until hitting the out-of-pocket limit. Brand-name drugs might’ve discounts to help you through this phase, while generic drugs typically require a 25% cost sharing from you.

The Coverage Gap is a temporary limit on coverage, aiming to reduce Medicare’s spending. Starting in 2025, this gap is gradually being phased out to simplify Medicare Part D plans.

Impact on Prescription Drug Costs

Understanding how the Medicare ‘Donut Hole can greatly impact your prescription drug costs is crucial, as it may require you to contribute a percentage of the expenses until reaching the out-of-pocket limit. Moving through the coverage gap in Part D plans during this phase can lead to increased out-of-pocket costs for prescription drugs.

While brand-name drugs may have discounts, you could still be responsible for paying up to 25% of the cost, and generic drugs typically entail covering 25% of the drug price. It’s important to grasp how the Donut Hole affects your Part D coverage for prescription drugs.

Some plans, such as Humana, provide extra coverage during this stage to help with your drug costs. If you need additional assistance, you may qualify for Extra Help to effectively manage your prescription expenses.

Changes to Coverage in 2025

With the Donut Hole elimination on the horizon, Medicare beneficiaries can expect significant alterations in their coverage. Here are some key points to keep in mind:

  • The Part D Coverage Gap will be removed, providing relief to beneficiaries.
  • Alternative coverage options will be introduced to replace the Coverage Gap stage.
  • Medicare plans will be simplified, making it easier for beneficiaries to comprehend their coverage.
  • Temporary limits on drug plan coverage will be lifted, ensuring continuous access to necessary medications.
  • Changes in Medicare Part D plans will enhance prescription drug coverage for beneficiaries.

Navigating the Donut Hole

To successfully navigate the Medicare ‘Donut Hole,’ you need to understand your drug coverage limits and available discounts. The Donut Hole, also known as the coverage gap, is a stage in many Medicare Part D plans where you pay a higher amount for your covered prescription drugs.

When you enter this phase, you may have to cover a significant portion of the drug costs until you reach catastrophic coverage. Brand-name drugs might’ve discounts through programs like the Coverage Gap Discount Program, while generic drugs typically require you to pay 25% of the cost.

Some plans, such as those offered by Humana, provide additional coverage during the Donut Hole to help with prescription costs. Remember, the costs you pay during this phase contribute towards moving you through the coverage gap.

Tips for Beneficiaries

Consider switching to generic drugs to reduce costs while managing the Medicare ‘Donut Hole.’ To make the most out of your prescription drug plans during this phase, follow these tips:

  • Compare drug prices online to find the best deals on prescriptions.
  • Consider applying for Extra Help if you qualify to reduce out-of-pocket spending.
  • Check if your Medicare Part D plan offers additional coverage or discounts.
  • Plan ahead by discussing lower-cost drug alternatives with your healthcare provider.
  • Be aware of the drugs covered by your plan to maximize benefits and savings.



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