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,” also known as the coverage gap. Unfortunately, it’s not as sweet as the one you get from your neighborhood bakery.

The donut hole is the third phase of Medicare Part D (prescription drug coverage). If you need a refresher on Part D, this video breaks it down. In the donut hole, you’ll temporarily pay more for your meds than in other Part D phases.

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Here are some examples of how the donut hole works:

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 “Costs in the coverage gap.”


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.