How Does the Coverage Gap (Donut Hole) Work?

Example Medicare Drug Plan for 2017*

Your plan may vary depending on your deductible and copays

*The example above shows 2017 calendar year costs for covered drugs in a plan that meets Medicare’s standards in 2017.  Your costs may vary since each Medicare drug plan is structured differently.

YOUR YEARLY JOURNEY THROUGH THE DONUT HOLE:

Deductible Period-

You pay the first $400 of your actual drug cost before your Medicare coverage begins to pay.

Coinsurance/Copayment Period-

You pay your coinsurance or copayment amount until the actual cost of your drugs reaches $3,700.  Notice:  This does not mean your out-of-pocket will be $3,700.  The actual drug cost of $3,700 is based on your out-of-pocket plus what Medicare pays.

Coverage Gap Period (Donut Hole)-

You pay the cost of your drugs until your total out-of-pocket reaches $4,950. This includes amounts you paid earlier during your deductible and coinsurance/copayment period.  Based on the example above, the most you would pay during the coverage gap period would be $3,725. In 2017, you will receive a 60% discount on covered brand drugs and 49% discount on generics during the coverage gap.  Check with your plan to see if your drugs are eligible for the discount.

Catastrophic Coverage Period-

You pay the reduced coinsurance or copayment amount set by your Medicare drug plan for the remainder of the year.

Note:  People who have limited income and resources and qualify for full Extra Help or have additional coverage aren’t affected by the gap in coverage.  They would continue to pay the same copayment amount for each prescription they get.

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