What is the coverage gap or “donut hole” in a Part D plan?
When the Medicare Modernization Act of 2003 (MMA) established the Medicare Part D prescription drug benefit, it defined a standard benefit that includes a gap in coverage as a way of limiting federal spending. When beneficiaries fall into this so-called “donut hole,” they are responsible for the full cost of their prescription drugs plus they must continue paying their Part D premiums even though they are not receiving benefits. While plans are not required to have a donut hole, most of them do have a coverage gap. A few plans offer coverage for drugs in the donut hole, but typically only generics are covered.
The “donut hole” coverage gap requires beneficiaries to pay substantially more for their drugs when they have reached a certain level of spending, and it was included in the standard benefit design by the law that originally established the Part D program. While a few plans offer some coverage in the donut hole, most beneficiaries who reach the gap will experience increased costs.
