What is the Medicare Coverage Gap? This coverage gap, frequently referred to as the donut hole, is part of the Part D prescription plan. Anyone enrolled in Part D Medicare is required to pay a deductible of $310. After this deductible is paid, the insurance pays for 75% of your prescription costs and you pay 25% until the total drug costs reach $2,830, including your deductible. After you reach the 2,830 in total drug costs, you are in the donut hole or Medicare Coverage Gap.
To most peoples dismay, being in the donut hole means you must pay your full cost of prescription drugs. When you reach the $2,830 and become in the donut hole until your total drug costs reach $4,550 you are responsible for paying your complete drug costs. Once you reach $4,550 in total drug costs the Medicare Coverage Gap ends and your insurance pays for most of your drug costs until the end of the year. You will still be responsible for catastrophic costs, meaning you must pay a $2.40 co-pay for generic drugs and $6 for other drugs (or 5% whichever is higher). Keeping track of these costs is an important step in understanding what is the Medicare Coverage Gap.
Unfortunately, the total drug costs caps listed above are annual costs. Yes, this means it is possible to end up in the donut hole every year, once the $2,830 in total drug costs are met and before the $4,550 total drug costs occur. Also, these amounts only include the amounts paid for prescription drugs and does not include any premium payments that might be made. This makes the Medicare Coverage Gap very controversial. Individuals on Medicare Part D remain concerned about this coverage gap.