Medicare Part D donut hole (coverage gap) (2024)

FAQs

Is the Medicare donut hole going away 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.

The drug law, known as the Inflation Reduction Act, requires CMS to establish a Part D manufacturer discount program beginning on January 1, 2025 as part of the redesign of Medicare Part D benefit. This program will replace the existing Coverage Gap Discount Program, which sunsets as of January 1, 2025.

You'll pay 25% of the price. Medicare pays 75% of the price. Only the amount you pay will count towards getting you out of the “donut hole.”

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.

Once you and your plan have spent $5,030 on covered drugs in 2024, you're in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won't enter 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").

As of 2024, Part D enrollees are no longer required to pay 5% coinsurance after they reach catastrophic coverage. This threshold is set at $8,000 in what's called “true out-of-pocket,” or TrOOP costs.

In 2024, after paying the initial deductible, a person on Medicare will pay 25 percent of drug costs. They will have a cap of about $3,300 and will no longer pay five percent of drug costs in the catastrophic phase. In 2025, after paying the initial deductible, a person on Medicare will pay 25 percent of drug costs.

Out-of-pocket costs

will be capped at $2,000, starting in 2025. You'll also have the option to pay out-of-pocket costs in monthly amounts over the plan year, instead of when they happen.

What insurance has a donut hole? ›

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.

So if you are in the Donut Hole and then move to another Medicare Part D plan, most likely you will still be in the Donut Hole or Coverage Gap (assuming that your new Medicare plan has the same Initial Coverage Limit or ICL). Changing Drug Plans? Your retail drug costs and out-of-pocket spending move with you.

The term donut hole refers to the way a person needs to pay for coverage. A person pays a specified amount for their prescription drugs, and once they meet this deductible, their plan takes over the funding. However, when the plan has paid up to a specified limit, the person has reached the donut hole.

You enter the Part D Coverage Gap once the total amount you and your drug plan pay for prescription drugs during the year reaches the Initial Coverage Limit, which is $5,030 in 2024.

The donut hole finally closed for good in 2020, having phased out in 2019 for brand-name drugs and in 2020 for generic drugs. That doesn't mean your prescriptions are totally covered.

The standard monthly premium for Medicare Part B enrollees will be $174.70 for 2024, an increase of $9.80 from $164.90 in 2023.

Beginning in 2025, people with Medicare Part D will have an annual limit, capping their out-of-pocket prescription drug costs at $2,000. In the years that follow, annual limits will be adjusted based on inflation.

In 2024, a Smaller Number of Part D Stand-Alone Drug Plans Will Be Premium-Free to Enrollees Receiving the Low-Income Subsidy Than in Any Year Since Part D Started. Through the Part D LIS program, enrollees with low incomes and modest assets are eligible for assistance with Part D plan premiums and cost sharing.