Understanding the 2018 Medicare Part D Coverage Gap or Donut Hole

Posted:February 13, 2018

 

The Donut Hole or Coverage Gap is a term used to describe a gap or pause in your Medicare Part D prescription drug plan or Medicare Advantage plan coverage where, prior to 2011, you were 100% responsible for the cost of your prescription drugs – unless your Medicare plan provided some brand-name or generic drug coverage through the Donut Hole.

However, starting in 2011, Medicare Part D prescription drug plans and the pharmaceutical drug manufacturers began to share a portion of your medication expenses while you are in the Donut Hole (giving you what we now call the Donut Hole discount).  So if you reach the Donut Hole, you are no longer responsible for paying 100% of the retail drug price, and instead, you pay a discounted price.

The Donut Hole is actually the third part or phase of your Medicare Part D prescription drug coverage and you only reach this phase when your drug spending exceeds a certain point.

Will you enter the 2018 Donut Hole?

If your formulary medications have a total retail value of over $3,750 or you have retail drug costs of over $313 per month, you will enter the 2018 Donut Hole and receive a discount on your Medicare Part D prescriptions – not what you spend, but the actual retail value of the medications you use.  (If you are receiving Medicare Part D Extra Help, you never have a Donut Hole in your coverage.)

What happens if you enter the Donut Hole?

If you enter the Donut Hole, you will receive a discount on all generic and brand name formulary drugs that you purchase.  And here are the discounts:

And this means: You will save more money on generic medications in the 2018 Coverage Gap. As an example, if you reach the 2018 Donut Hole phase of your Medicare Part D plan, and your generic medication has a retail cost of $100, you will pay $44. In this example, the $44 that you spend will count toward your out-of-pocket spending limit or TrOOP.

  • The 2018 Donut Hole discount for brand-name drugs will increase to 65% and you will receive credit for 85% of the retail drug cost toward meeting your 2018 total out-of-pocket maximum (TrOOP) or Donut Hole exit point (the 35% you spend plus the 50% drug manufacturer discount).

And this means: You will have additional savings on brand-name drugs in the 2018 Coverage Gap. For example, if you reach the 2018 Donut Hole and purchase a brand-name medication with a retail cost of $100, you will pay $35 for the medication, and receive $85 credit toward meeting your 2018 out-of-pocket spending limit – or Donut Hole exit point. The 2018 TrOOP limit or Donut Hole exit point is $5,000.

 

For more information on the Donut Hole or Coverage Gap, please click here to read further on the q1medicare site!