What happens in the donut hole?
Asked by: Alverta Hill | Last update: November 23, 2025Score: 5/5 (54 votes)
What happens when you go into the donut hole?
Just like in the initial coverage period, when you entered the donut hole, you would be responsible for paying 25% of the costs of your medications. Once you spent $8,000 out of pocket in 2024 on your prescription drug costs, you entered the catastrophic coverage period.
What happened to the donut hole in 2025?
As of Jan 1, 2025, the Medicare Part D coverage gap (commonly known as the "donut hole") is gone. This major change, a result of the Inflation Reduction Act, simplifies prescription drug coverage by removing the coverage gap phase and establishing a $2,000 annual cap on out-of-pocket spending for covered drugs.
How long do you stay in the donut hole?
Once you enter the donut hole, you stay there until you've spent a specific amount for covered drugs. (People who qualify for the Extra Help program won't enter the coverage gap.) This amount changes each year, and it includes: What you've paid for the deductible, copayments or coinsurance for covered drugs.
Will the donut hole go away in 2024?
Even though the “donut hole” will close in 2025, there are steps you can take now to avoid extra costs associated with the coverage gap in 2024. You could compare prescription drug plans each year to make sure your plan offers the best coverage for your medications.
Medicare Donut Hole Explained Simply
How do I avoid the Medicare donut hole?
Discuss lower-cost drug alternatives with your healthcare professionals. Seek out discounts on medications. Choose generic drugs over brand-name drugs. Opt for in-network pharmacies only.
Is there a $2000 cap on Medicare drugs?
On Jan. 1, 2025, a new out-of-pocket cap on drug costs went into effect for Medicare Part D patients. The new cap is set at $2,000 per year for all prescriptions covered by Part D plans.
Can I use GoodRx if I'm in the donut hole?
Key takeaways:
You may want to consider using GoodRx instead of Medicare when Medicare doesn't cover your medication, when you won't reach your annual deductible, or when you're in the coverage gap phase (“donut hole”) of your Medicare plan.
Are donut holes punched out?
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.
Is Medicare getting rid of the donut hole?
Yes, the plan design for Medicare Part D prescription medication benefits will eliminate the donut hole beginning January 1, 2025.
What happens to Medicare in 2026?
For the first time, Medicare is able to negotiate directly with manufacturers for the price of certain high-spending brand-name Medicare Part B and Part D drugs that don't have competition. Prices have been negotiated for the first 10 drugs selected and will be effective in 2026.
Why do people say not to get a Medicare Advantage plan?
Disadvantages of Medicare Advantage plans can include difficulty switching out of the plans later, restrictions on care access, limited provider networks, and limitations on extra benefits.
What is the maximum out-of-pocket for Medicare Part D in 2024?
Whether you're taking only brand-name drugs or a mix of brand-name and generic drugs, most people who reach the catastrophic coverage phase in 2024 will pay between $3,300 and $3,800 in out-of-pocket costs. In 2024, Mr. Alvarez takes $200,000 in Medicare Part D covered brand-name drugs.
What is the dollar amount of the Medicare donut hole?
Starting in 2025, Medicare no longer has a 'donut hole,' or coverage gap. In prior years, you paid up to 25% out of pocket for covered medications in the donut hole phase. Starting in 2025, once you reach the annual out-of-pocket cap ($2,000 in 2025), you're done paying out of pocket for the year.
What is the best way to explain the donut hole?
Medicare drug plans previously had a coverage gap (also called the "donut hole"). The donut hole was a temporary limit on what the drug plan would cover for drugs. Now all Medicare plans include a $2,000 cap on what you pay out-of-pocket for prescription drugs covered by your plan.
What is the donut hole in social security?
Earnings above this threshold are not taxed for Social Security. The proposed reform suggests reinstating the payroll tax on incomes exceeding $400,000, creating a gap — or “donut hole” — between the current cap and $400,000 where earnings remain untaxed.
Is there a way to avoid the donut hole?
You have to spend $8,000 on covered medications during the year to get out of the coverage gap. You can consider using GoodRx, patient assistance programs, and other cost-saving options to avoid the donut hole.
What is a fun fact about donut holes?
There are several purported origins for donut holes and the "ring" shaped donut. 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.
What to do when you are in the donut hole?
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.
Is there a donut hole in 2024?
The Medicare Part D donut hole or coverage gap phase of coverage no longer exists as of December 31, 2024. It was the coverage phase after the initial coverage period when you owed a higher or different percentage of the cost of your drugs.
Can a pharmacy refuse to use GoodRx?
Are pharmacies required to accept GoodRx coupons? Participating pharmacies are required to accept GoodRx through contracts with their pharmacy benefit managers (PBMs). An exception is for controlled medications. Accepting a GoodRx coupon for a controlled medication is always at the discretion of the pharmacist.
Why does the Medicare donut hole exist?
The donut hole in Medicare was a coverage gap that occurred when you and your drug plan reached a certain spending threshold. To get out of the donut hole, your out-of-pocket costs must have exceeded a specific dollar amount.
What is the new Medicare rule for 2025?
Medicare Part D cap of $2,000
Beginning January 1, 2025, people with Part D plans through traditional Medicare and Medicare Advantage plans with prescription drug coverage won't pay more than $2,000 over the calendar year in out-of-pocket costs for their prescription medications.
What 10 drugs will be reduced by Medicare?
On August 29, 2023, CMS published the list of 10 drugs covered under Medicare Part D selected for the first cycle of negotiation. The drugs selected are Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and NovoLog/Fiasp.
Why is Eliquis so expensive on Medicare?
The high cost of Eliquis is partly due to the fact that the U.S. government doesn't impose any restrictions on the markup pharmaceutical companies can add to the production cost of a drug. Eliquis is also a brand name drug, which is protected under a patent for 20 years.