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 “Medicare donut hole.” Its real name is the coverage gap for Medicare Part D prescription drug plans.

When Part D started in 2006, the donut hole was a big deal – but not in a good way like the treat from your local bakery. It was, literally, a hole in coverage. People who reached the donut hole had to pay the full cost of their prescriptions.

You may have heard or read that the Medicare donut hole ended or closed. The federal government made changes to the Medicare donut hole, shrinking the gap over several years. But there aren’t any Medicare Part D plans without a donut hole. All Part D plans still include the coverage gap stage. The good news is you no longer have to pay 100% of the cost for covered drugs in the Medicare coverage gap. You now get some help with those costs.

How does the Medicare donut hole work?

Medicare Part D is your prescription drug coverage. It’s available to everyone with Medicare Parts A and/or B, but you can only get it through private health insurance plans. You can enroll in a Part D plan separately, or you may get it in a Medicare Advantage plan that combines medical and prescription drug coverage in one.

Each stage of Part D is like a stepping stone throughout the year. The Medicare Part D donut hole is the third stage. The four stages start over on Jan. 1 of each year.

[Click on the image to enlarge]

How do I get out of the Medicare donut hole?

The amount of time you spend in the donut hole depends on the cost of your covered drugs and the benefits of the Part D plan you selected. Not everyone will get to the Medicare donut hole. If you do, you stay there until you’ve spent a specific amount for covered drugs.

This amount changes each year. It includes what you’ve paid for the deductible, copayments or coinsurance for covered drugs, and the amount of the manufacturer discount for brand-name drugs in the gap. It doesn’t include what you pay for your monthly premium or what your plan paid for covered drugs in the gap. People who qualify for the Extra Help program won’t enter the coverage gap.

Once you’ve spent the maximum amount in the donut hole, you move on to the catastrophic coverage phase.

How my mom prepares for the Medicare Part D donut hole

A few years ago my mom developed a health problem and started taking regular medicine every day. The medicine wasn’t cheap, so she hit the Medicare donut hole for the first time. Here’s how she plans for the donut hole:

1. My mom is retired and on a fixed income. We figure out the cost of her medicine and keep track of the Part D stages. This helps know how much it will cost in the coverage gap. She sets aside money throughout the year for the cost of her medicines so she’s ready if she hits the donut hole.

2. She pays close attention to the Explanation of Benefits (EOB) document she gets each month from her Medicare plan. It tells how much more money you have to spend before you hit the donut hole and, later, how much you have left to spend before you get out of it.

3. She takes steps to lower her medicine costs. She switched to getting her regular prescription through the mail, in larger quantities. When she sees her doctor each year, she asks about each of her medicines to see if she still needs to take them, if there are cheaper options, or if she can take them less often.

Seven tips to avoid the Medicare donut hole

Getting the best prices on medicines is always good – and it may be extra helpful for people on Medicare Part D who hit the donut hole. Some people find that with savvy shopping skills, they can lower their prescription costs enough that they don’t hit the donut hole at all.

These seven tips can help you save time, money and frustration when trying to understand Medicare prescription drug costs.

Compare Medicare plans each year during open enrollment season

The Medicare.gov website is the best place to do it. Make sure your plan still covers your prescription drugs for the next plan year, check whether the price of your drugs is going up and see whether a different plan could save you money.

Talk to your doctor about ways to save money on prescriptions

You might be able to switch a brand-name drug to a generic drug, lower the amount you take or even stop taking a medicine you no longer need.

Talk to your pharmacist to find less expensive options

Sit down with your pharmacist to look at all the prescriptions you take and talk about less expensive prescriptions you might be able to take. You can get ideas about combinations of prescriptions that might make you feel better and discuss these with your doctor. This is called a Medication Therapy Management consultation, and all Medicare Part D prescription drug plans cover it.

If you’re in the Medicare donut hole and nearing the end of the year, ask your pharmacist to help you assess what prescriptions you really need to buy at that time. Do you have enough medicine at home to get you through the end of the year? Could you get a smaller quantity this time?

Ask your insurance company if you can get better prices

Did you know you may be able to get better prices on prescriptions at a different pharmacy, by mail or by getting a different quantity (like a 90-day supply instead of a 30-day supply)? Your Medicare plan service team can help you find the best option.

If you need short-term medicine, like a week’s worth of antibiotics for a sinus infection, call your insurance company to ask for the least expensive place to get them, instead of just going to the closest drugstore.

If you’re at the pharmacy checkout and your prescription costs more than you think it should, stop and don’t pay for it. You can’t return prescriptions, even if there’s a mistake. Call your health insurance company and ask about the cost to make sure it’s right before you finish checking out.

Use cost calculators to find the best prices

If you have an online account for your Medicare Part D plan, look for a prescription drug calculator tool where you can put in the prescriptions you take and how much you need. It’ll tell you how much the covered drug will cost you at different pharmacies. It might not be cheapest at the corner drugstore.

Ask local pharmacies if they offer rewards

Ask your local pharmacy if it has a rewards program. It may help you save money on your prescriptions, or you could earn rewards toward other items in the store.

Get extra help paying costs

Visit medicare.gov to learn more about the programs available to help you. Based on your income and resources, you may qualify for help paying Medicare plan premiums, deductibles or prescription drug costs.

NEED MORE HELP? CHECK OUT THESE RESOURCES:

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

The State Health Insurance Assistance Program offers free, independent counseling services and local workshops to help with your health care benefit decisions.

Visit medicare.gov or talk to a Medicare expert, like an agent, broker or health plan sales rep.

Our monthly Medicare newsletter delivers helpful tips straight to your inbox.