Medicare Part D Donut Hole/Coverage Gap

Period of time where there is a coverage gap in your Medicare D plan, which covers pharmaceuticals. Medicare Part D consists of four stages of coverage:

• Deductible Stage: If your plan has a deductible, you usually pay the full cost of your drugs up to the deductible amount.
• Initial Coverage Stage: During this stage, the plan pays its share of the cost and you pay a copayment or coinsurance for each prescription you fill until your total drug costs reaches $3,750 (changes year to year).
• Coverage Gap/Donut Hole: During this stage, you've exceeded the initial coverage limit of your plan so the amount you pay for prescription drugs increases. If you have noticed that you are suddenly paying more for prescription drugs, you may be in the donut hole. This stage continues until your yearly out of pocket drug costs reach $5000 (changes year to year).
• Catastrophic Coverage Stage: In this stage, you have left the donut hole and you pay only a small copayment or coinsurance amount for each prescription you fill.

On January 1, the member resets back at the Deductible Stage (if plan has deductible) or the Initial Coverage Stage (if plan does NOT have a deductible).