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Donut Hole

The Part D Coverage Gap (Donut Hole)

There are several ways individuals can become eligible for Medicare. Age, disability, and certain diagnoses can qualify someone for Medicare. Prior to enrollment, understanding how Medicare works and which plans to enroll in will ensure you get the most value. First, you’ll need to know if you are eligible to enroll in Medicare. To learn more about Missouri Medicare Eligibility read our newest blog post here.

What is the coverage gap?

The coverage gap is part of every Part D plan. Put simply, it is a “gap” in prescription drug coverage where the member will pay more for prescription drugs.

How does the coverage gap work?

Medicare beneficiaries will find themselves in the coverage gap when the plan’s initial coverage limit has been met – when the total prescription costs reach $4430.

Once in the donut hole, beneficiaries will receive a 75% discount on name-brand drugs and a 63% discount on generic medications. While this seems like a significant discount, the member’s out-of-pocket portion will be much higher than before they were in the coverage gap.

The coverage gap remains in effect until the member has paid $7050 for prescription drugs. At that point, catastrophic coverage begins. Once in catastrophic coverage, the member is only responsible for 5% of the prescription cost. This lasts until the end of the year.

Items that count towards the coverage gap are the yearly deductible, coinsurance, copayments, and the discount you get on brand-name drugs in the coverage gap. What you pay in the coverage gap is also relevant.

Items that don’t count toward the coverage gap would be the drug plan premium, the pharmacy dispensing fee and the amount you would pay for drugs that aren’t covered.

Tips to Avoid the Medicare Part D Coverage Gap

Sometimes there is simply nothing that can be done to avoid the coverage gap. However, there are a few things that members can try to avoid the donut hole.

First, be sure to have your drug plan reviewed every year. While it may work great in the current year, the upcoming year’s changes could mean that you find yourself in the donut hole next year, even though your medications didn’t change.

Second, use generic medications whenever possible. This will help extend the life of your initial coverage limit.

Third, compare prices across pharmacies. Each drug plan will have a list of pharmacies that are preferred, meaning that those pharmacies will generally offer lower prices than standard pharmacies. Using a preferred pharmacy will decrease your out-of-pocket expenses for prescription medications.

Fourth, try using mail-order medications or ordering your medications online. Sometimes this comes with a discount.

Fifth, call the drug manufacturer directly and ask for a discount or coupon. Many times, they will give these to consumers who ask for them.

Lastly, you can apply to the Extra Help program. This program offers financial assistance with Part D premiums, deductibles, and copays.

Part D Straddle Claims

A Part D straddle claim is one in which the medication “straddles” two coverage phases. For example, if you have $5 left in your initial coverage phase, but the medication is $10, that medication is a staddle claim since it actually puts you into the next phase of coverage, the donut hole.

In this case, the individual’s expense is not clear. When this happens, the plan will calculate what the individual owes using the coverage gap discount and the dispensing fee for the prescription.

Medicare Advantage Drug Plans and the Coverage Gap

Medicare Advantage (Part C) plans that include prescription drug coverage still include the traditional coverage gap. However, a Medicare Advantage plan may still cover some of the generic medications while in the coverage gap. If it does, payment for those generic medications does not go towards the total out-of-pocket expense to get out of the coverage gap and into catastrophic coverage.

Coverage Gap Prescription Assistance

Medicare offers the Extra Help program for individuals with low incomes and who meet certain requirements. The program is offered individually through each state and can help pay for some or all of an individual’s prescription expenses while in the coverage gap.

If the individual is not eligible for the Extra Help program, they can also speak to their medical provider about switching to different medications. While this is not always possible, there may be times when a cheaper medication is an option. Of course, you and your doctor will need to decide if that medication is just as effective.

Help with the


The donut hole can be very difficult to understand, and we get many questions on this topic. We have licensed agents available to answer all of your Medicare questions.

If you find yourself in the donut hole (and even if you don’t), it is so important to have your drug plan reviewed. Plans change each year, and we want to make sure you are in the plan that can best help you avoid winding up in a coverage gap.


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The donut hole was created to incentivize Part D members to use generic medications instead of their name-brand counterparts. This would both keep the member’s expense low, as well as the expense on the part of the Medicare program.

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Yes, all Part D plans have a coverage gap. This includes Medicare Advantage plans that have prescription drug coverage.

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The donut hole will still apply, but since Extra Help reduces the cost of prescription drugs, it is less likely that an Extra Help beneficiary will reach the coverage gap.

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Each time you fill a prescription, the insurance company that holds your Part D plan will send you an Explanation of Benefits (EOB). This will tell you which coverage phase you are in and where you are at in relation to the coverage gap.

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During the initial coverage phase, the Part D plan pays more than 75% of the prescription costs. However, they do not generally pay that much during the coverage gap, so your costs will increase.

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The total cost that you and your plan have paid for covered medications counts towards reaching the coverage gap. For example, if you pay $25 and your plan pays $75 for a medication, $100 will go towards the initial coverage limit.

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Copays do not count towards the coverage gap. The only amount that counts is what you pay and what your plan pays.

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No, only covered medications apply toward the coverage gap. There is no discount given for medications that are not part of the Part D drug formulary.

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