Medicare Part D, also known as a Prescription Drug Plan (PDP), helps people with Medicare pay for their medication. These plans are purchased from private health insurance providers and come with a variety of benefits and premiums. But for some high-usage Medicare enrollees, they can also come with unexpected expenses, called the Medicare Part D donut hole.

What Is the Medicare Part D Donut Hole?

The Medicare Part D donut hole is a temporary coverage gap that could make you pay more for your prescription drugs than you might have expected. Not all people on Medicare reach the donut hole. You first need to spend a set amount in expenses. If you do reach the coverage gap, you are responsible for paying 25% of your covered prescription drug costs out of pocket until you reach a set maximum limit.1

The Medicare Part D donut hole works like this:

  1. You pay your Part D monthly premiums throughout your plan’s coverage year.
  2. Before you reach your deductible, you pay all of the cost of your prescription drugs.
  3. Once you’ve reached your deductible, you’ll only pay a copay or coinsurance for your covered prescription drug costs, leaving the remaining amount for your Part D plan to pay. This is until you’ve reached the coverage limit ($4,130 in 2021).1
  4. Once the coverage limit has been reached, you will hit the Medicare donut hole. During this time, you will be responsible for no more than 25% of your covered prescription drug costs until you hit the yearly out-of-pocket maximum limit ($6,550 in 2021).2
  5. When you exceed the yearly out-of-pocket maximum, you will receive what’s called “catastrophic coverage.” This means that you may get your prescription drugs completely covered or at a smaller cost for the remainder of the year.


Thumbnail of Medicare Donut Hole infographic

What Costs Count Toward the Medicare Part D Donut Hole?

The expenses that count toward the Medicare donut hole can include:

  • Copayments
  • Coinsurance
  • Yearly deductible
  • Brand-name prescription drug discounts you receive while in the Medicare Part D donut hole
  • The amount you pay in the Medicare Part D donut hole

The expenses that don’t count toward the Medicare Part D donut hole can include:

  • Your plan’s monthly premium
  • The pharmacy dispensing fee
  • The cost of prescription drugs that aren’t covered under your drug plan’s formulary

Hot to Shop for a Medicare Part D Plan

If you’re ready to enroll in a Medicare Part D plan, here are some tips to consider:

  1. Make a list of your current medications.
  2. Review the details of your current coverage to better compare a new plan.
  3. Determine if you’d like to order your prescriptions by mail.
  4. Check the plan network to see if your current pharmacy is included.
  5. Review the premium, annual deductible, and out-of-pocket maximum limit of any Medicare Part D plan you’re considering.

HealthMarkets Makes Finding a Part D Plan Easy

Concerned about how the Medicare Part D donut hole will affect your budget? Choosing a plan that best meets your needs could help keep costs in check. HealthMarkets can help you compare coverage options and view plan details to find the Part D coverage that’s right for you. Start shopping for Part D plans today.

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