Medicare Donut Hole

Published: Thursday, July 26 2018
Last Updated: 3 months ago

When you enroll in Medicare Part D prescription drug plan, one of the most important terms for you to understand is donut hole Medicare, which is also referred to as a coverage gap. Although most people who are enrolled in Medicare Part D never encounter the coverage gap, it's important that you understand what the donut hole 2018 is and how to best prepare for it.

What Is the Medicare Donut Hole?

The Medicare Part D donut hole (not to be confused with doughnut holes) is a term that is designed to indicate a gap within the coverage that is received from this prescription drug plan. The standard coverage provided by Medicare Part D before you reach the Medicare D donut hole will cover a substantial amount of the costs associated with your medications. Although you receive a large amount of coverage with Medicare Part D, there is a point where the coverage ends.

The gap in coverage refers to the fact that you will be provided with catastrophic coverage if your costs reach a very high amount. However, there is a gap between the end of the standard coverage and the beginning of the catastrophic coverage. You were once expected to pay 100% of the costs in relation to your medications when entering into the Medicare Part D donut hole.

Over the past half decade, however, prescription drug plans typically offer discounts on prescription medications when you're in the Medicare D donut hole.

The Cost of Reaching the Donut Hole In Medicare

In most Medicare Part D plans, you will be required to pay 100% of your prescription medication costs until you have hit the yearly deductible, which is typically on the lower end. The Medicare plan that you are enrolled in will then cover a substantial portion of your prescription drug costs, which could be 75% of the costs with a 25% coinsurance that's meant to be paid by you. However, these costs are only covered up to a certain amount, which is something that you should be aware of in order to know whether or not you will need to pay higher costs for medications during the year.

Medicare Donut Hole 2018

Given the fact that the exact gap between standard coverage and catastrophic coverage shrinks with each passing year, the coverage gap for 2018 differs from the one in 2017. For 2018, you will enter into the donut hole medicare once you and the Medicare Part D plan you are enrolled into have spent a total of $3,750 for any drugs and medications that are covered by the plan.

When you have entered into the Medicare Part D donut hole, you will be expected to pay 35% of the total costs of any brand name drugs that you require and 44% of the total costs of your generic drugs. Once your out-of-pocket costs have reached $5,000, you will be enrolled in a catastrophic coverage plan.

If you are enrolled into a Medicare Part D plan that requires you to purchase medications at specific pharmacies, make sure that you focus on doing so in order for your out-of-pocket costs to count towards the amount that you pay within the donut hole 2018. When you have been entered into the catastrophic coverage phase of Medicare, you will only pay a small copayment or coinsurance amount.

The types of costs that qualify as out-of-pocket costs when you're in the donut hole medicare include your deductible, and coinsurance or copayments that you made during the initial portion of Medicare Part D, the coinsurance, and copayments that you have made while in the Medicare D donut hole, and the manufacturer discount of 50% that was applied to brand-name medications while you were in the coverage gap.

Avoiding the Medicare D Donut Hole

The best way to avoid entering into the Medicare Part D donut hole is to try to keep your costs below $3,750 so that you don't reach the 2018 Medicare Part D limit that will place you into the donut hole Medicare. To accomplish this goal, consider purchasing generic medications as opposed to brand-name medications, which is particularly important if you're on pace to reach the 2018 limit.

You may also be able to receive additional financial assistance in the event that you don't meet the minimum requirements for yearly income. This financial assistance comes in the form of what's known as the pharmaceutical assistance program. Make sure that you have selected a plan that comes with relatively low copayment and coinsurance amounts as well.

Medicare Part D Donut Hole Chart

In order to be certain about what the donut hole 2018 is and how it affects you, you should consider looking at a more detailed chart that lists all of the expenses and costs associated with the donut hole Medicare. By looking at this chart, you will be able to ascertain the number of copayments you will be expected to pay, the amount that you will need to pay for medications during the catastrophic coverage phase, your standard deductible, and a range of additional expenses and parameters that you may want to be aware of in regards to the donut hole Medicare.

When Does the Medicare Donut Hole Start?

As was mentioned earlier, the Medicare Part D donut hole starts once you've reached the standard limit of $3,750 that was spent by the plan as well as your money, the latter of which refers to the copayments and coinsurance that you had to pay with standard coverage.

When Does It End?

As touched upon previously, the amount that a person would need to pay when falling into the coverage gap has been lessening with each passing year. At the moment, you will be required to pay a total of $5,000 of out-of-pocket expenses before being enrolled into catastrophic coverage, at which point you will have fulfilled your obligations for the donut hole 2018.