The Donut Hole: A Step-By-Step Explanation (2024)

FAQs

What is the donut hole explanation? ›

Most plans with Medicare prescription drug coverage (Part D) have a coverage gap (called a "donut hole"). This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit.

This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $5,030 on covered drugs in 2024, you're in the coverage gap.

The Inflation Reduction Act (IRA) signed by President Biden in 2022 will eliminate the Prescription Drugs Coverage Gap (known as the donut hole) for Seniors in 2025. Most Medicare drug plans have a coverage gap (also called the "donut hole").

There is not a Medicare plan that covers the donut hole. You may wonder if a Medigap could help you avoid donut hole costs. Medigap policies are private Medicare supplement insurance plans that are sold to cover additional costs and some services not traditionally covered by Original Medicare.

To fully cook the insides of the dough, the dough would have to stay in the oil for a longer time, which would lead to the outsides becoming burnt. Punching a hole in the middle of the dough, however, allows the insides and the outsides to cook evenly, creating a perfect donut.

Stuck in the donut hole? If you reach the coverage gap and can't afford your medications, look up discounts for those medications on GoodRx. There's a good chance you can save a significant amount in the long run, especially if you know you won't be able to meet the $8,000 out-of-pocket maximum.

If you have limited income and resources, you may want to see if you qualify to receive Medicare's Extra Help/Part D Low-Income Subsidy. People with Extra Help see major savings on their drug plans and medications at the pharmacy, and do not fall into the donut hole.

You'll pay a discounted rate if you buy your medications at a pharmacy or through the mail. What you pay and what the drug manufacturer pays (95%) will count towards out-of-pocket spending that helps you eventually get out of the “donut hole.”

You leave the donut hole once you've spent $8,000 out of pocket for covered drugs in 2024. 2024 is the last year for the donut hole. A $2,000 out-of-pocket cap takes effect for Medicare Part D in 2025.

What is the maximum out-of-pocket for Part D in 2024? ›

In addition, as of January 1, 2024, for some people enrolled in Medicare Part D who have very high drug costs, for the first time, their out-of-pocket costs will be capped at about $3,300 to $3,800 for most people.

Does the Donut Hole or Coverage Gap restart every year on January 1st or do we stay in the Gap from the previous year? Your Medicare Part D prescription drug plan coverage starts again each year — and along with your new coverage, your Donut Hole or Coverage Gap begins again each plan year.

However, when the plan has paid up to a specified limit, the person has reached the donut hole. Once they reach this point, a person has to start paying for their medications again until they reach another specified amount. After this, their plan takes over payment once again.

The Medicare Part D donut hole or coverage gap is the phase of Part D coverage after your initial coverage period. You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit. In 2024, that limit is $5,030.

Each month, your Medicare prescription drug plan will send you a printed Explanation of Benefits letter that will show you how close you are to entering the Coverage Gap or Donut Hole portion of your Medicare Part D plan. Also notice when the price you pay for your medications changes.

The concept of forming donuts with a hole in the center is commonly attributed to Captain Hanson Gregory, who claimed to have invented the first ring donut after cutting the center of his mother's donut out in 1847.

I'll look like the hole in the doughnut.” Hence, the fear of being the hole in the doughnut is the fear of giving over control to our higher power — and the underlying fear that we will disappear, losing our identity and our sense of self.

But “closing” does not mean that people reaching the donut hole do not pay anything for their drugs—it means that plans and pharmaceutical companies pick up more of the tab. Just like in the initial coverage period, when you enter the donut hole you will be responsible for paying 25% of the costs of your medications.

Forbidden Doughnuts

(aka Iced Pumpkin Cake Donuts, inspired by King Arthur Flour) Makes 12 to 18, depending on the size of your donut pans. 1 1/2 cups pumpkin puree. 1 cup sugar. 3 eggs.