What is the Medicare donut hole?

Medicare Part D is kind of like a donut. It includes a hole, or coverage gap.

If you have Medicare or plan to sign up soon, you’ve probably heard of the “donut hole,” sometimes called the coverage gap. Unfortunately it’s not as sweet as the one you get from your neighborhood bakery. The donut hole is part of Medicare Part D (prescription drug coverage) – the part where people who have many, or expensive, medicines temporarily have to pay more for them.

Part D works a little bit like, well a donut! Think of it like this: You stop at the bakery to buy your favorite frosted donut, and you take three bites right across the middle.

Pay for your donut

At the beginning of the year you pay full price for your medicines until you’ve paid a certain dollar amount, called your deductible. Read more in “Cost in the coverage gap.”

Next:

Bite 1: Donut – yum!

You share the cost of your prescription drugs with your health plan until that cost hits a certain dollar amount.

Bite 2: No donut – yuck.

You have to pay many of your medicine costs yourself. You can get them at a discounted price, but your plan helps a lot less. This is known as being in the donut hole or coverage gap. You pay until you hit your out-of-pocket limit, which is the most you’ll need to pay before your plan helps take care of the rest.

When you’ve paid that:

Bite 3: More donut – yum!

Your plan pays almost all of your prescription costs for the rest of the year. The amount you have to pay depends on your specific medicines, but no matter what, you’ll pay the least during this period.

Not everyone will get to the donut hole. if you don’t take a lot of medicine or those you do take aren’t very expensive, you probably won’t get there

You are reading the “Medicare Donut Hole” series.

Confused about the Medicare Donut Hole? This series can help you learn how to prepare for it.

Part 1: How can I prepare for the Medicare donut hole?
Part 2: What is the Medicare donut hole?
Part 3: How to avoid the donut hole in Medicare

Ready for more Medicare tips? Sign up for our monthly newsletter.