If you’re a Medicare beneficiary or approaching eligibility, one term you’ve likely come across is the donut hole. While it may sound harmless, it represents a serious gap in Medicare prescription drug coverage that could significantly affect your out-of-pocket expenses.
What Is the Medicare Donut Hole?
The donut hole is the coverage gap in most Medicare Part D drug plans. After you and your plan spend a certain amount on covered prescription drugs—$3,820 in previous years—you enter this coverage gap. During this phase, you are responsible for a larger share of your medication costs.
Not everyone will enter the donut hole, but many do, especially those who take multiple or expensive medications.
What Happens in the Donut Hole?
Once you reach the donut hole:
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You pay 25% of the cost of brand-name drugs.
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You pay 37% of the cost of generic drugs (prior to 2020).
Let’s say your medication costs $100. If you’re in the initial coverage phase and your plan requires a $20 copay, you’ll pay that amount. However, once you enter the donut hole, your share jumps to $25 (25% of $100). This increase can add up quickly if you rely on several medications.
Closing the Gap
Thanks to the Affordable Care Act, the donut hole has been closing over the years. By 2019, Medicare required beneficiaries to pay only 25% of the cost of brand-name prescriptions, and in 2020, the donut hole officially closed for generic drugs as well. Now, beneficiaries pay 25% of both brand-name and generic drug costs year-round.
What About Catastrophic Coverage?
If your out-of-pocket costs hit $5,100 in a year, you qualify for catastrophic coverage. This means you pay significantly less for your medications:
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$3.40 for generic drugs
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$8.50 for brand-name drugs
Costs that count toward reaching catastrophic coverage include:
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Your deductible
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What you paid during the initial coverage phase
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The full cost of brand-name drugs during the coverage gap
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Payments by others (including assistance programs)
Medicare at a Glance
Before diving deeper into solutions, here’s a quick breakdown of Medicare:
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Part A: Hospital insurance (inpatient care, skilled nursing, hospice)
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Part B: Medical insurance (doctor visits, outpatient care, supplies)
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Part C (Medicare Advantage): Combines A, B, and often D in one plan
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Part D: Prescription drug coverage
Understanding which parts you have and how they interact with each other is essential when planning for drug costs and coverage gaps.
Services Not Covered by Medicare
Even with comprehensive Medicare coverage, there are some services that are not included:
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Dental care
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Long-term care
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Cosmetic surgery
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Dentures
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Acupuncture
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Hearing aids
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Eye exams for glasses
Understanding these exclusions is crucial when budgeting for health care.
Extra Help and Assistance Programs
If you have limited income or resources, the Extra Help program may reduce your prescription drug costs. You may qualify to pay very little or nothing at all, especially after reaching catastrophic coverage.
There are also:
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State Pharmaceutical Assistance Programs
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AIDS Drug Assistance Programs
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Indian Health Service assistance
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Pharmaceutical company prescription assistance programs
These can provide relief for those who fall into the donut hole.
How Prescription Hope Can Help
The best way to avoid the high costs associated with the donut hole is through Prescription Hope’s medication access service.
What We Offer
Prescription Hope provides access to over 1,500 brand-name medications for a set monthly fee of $70.00 per medication. This includes:
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100% of the medication cost
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No need to worry about retail prices or fluctuating copays
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Medications sourced from 180+ U.S.-based pharmaceutical manufacturers
We are not a discount card or insurance plan. We work directly with pharmaceutical manufacturers’ patient assistance programs to deliver life-saving medications to those who need them most.
Who We Help
We assist:
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Individuals and families
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Social workers
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Insurance companies
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Local and state agencies
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Healthcare providers and systems
Whether you’re currently in the donut hole or worried about entering it, Prescription Hope is a cost-effective and reliable solution.
Don’t Let the Donut Hole Derail Your Budget
The Medicare donut hole can be a financial burden for many, but with the right knowledge and support, it can be managed—or even avoided. By understanding your coverage, utilizing assistance programs, and considering services like Prescription Hope, you can take control of your prescription costs and protect your financial health.
Visit our enrollment page to create your account and start saving today!
