Navigating the Medicare Prescription Drug Coverage Gap
June 15, 2021 | Tags:
The Medicare coverage gap, also known as the donut hole, is a temporary limit on what your Medicare Part D drug plan will pay for prescription drugs. Prior to 2020, being in the donut hole meant that you had to pay for all Part D costs out of pocket until you reached the threshold for more drug coverage. This changed in 2020 – while the Coverage Gap still remains, you will never pay more than 25% of your medication costs during this phase.
Not everyone will enter the coverage gap, but it’s important to know what to expect in case you do. Take a look through the commonly asked questions below to understand how your Part D coverage works in the donut hole.
When do I enter the coverage gap?
There are four coverage stages with a Medicare Part D drug plan. Depending on the stage you are in, you will be responsible for different amounts of your drug costs.
At the start of the year, you begin in the deductible stage (if your plan has one). Once you’ve paid your deductible, you move to the initial coverage stage which includes the standard copays and coinsurance outlined in your plan’s benefits. After these stages, you enter the coverage gap stage. This happens once the costs your Medicare Part D costs reach $4,130, also known as the total drug spend. This includes anything you, your plan, and others (like programs and organizations providing extra help) have paid toward your Part D covered prescriptions. The Centers for Medicare and Medicaid Services (CMS) sets the total drug spend amount for Medicare Part D plans annually.
What costs count toward the coverage gap?
- Your yearly deductible (if your plan has one)
- Your standard coinsurances and copays at the pharmacy
- The discounts you get on brand name drugs
What costs don’t count toward the coverage gap?
- Your drug plan’s premium
- What you pay for drugs that aren’t covered by your plan
What do I pay in the coverage gap?
Generally, once you reach the coverage gap, you'll pay no more than 25% of the cost for your plan's covered brand-name prescription drugs. The manufacturer and your Medicare Part D plan will pay the remaining 75% of the costs. Every Medicare Part D drug plan is different, so depending on your Medicare Part D drug plan’s benefits, you may pay even less than 25% for certain drugs. For instance, MedMutual Advantage plans cover certain generic drugs with the same copays as the initial coverage phase.
When do I leave the coverage gap?
You’ll remain in the coverage gap until your out-of-pocket expenses reach the amount set by CMS. For 2021, that amount is $6,550. To help you move through the coverage gap more quickly, these out-of-pocket expenses include the costs that you have paid toward your drug coverage for the year, like your deductible, copays and/or coinsurances, as well as a portion of the cost of brand name drugs paid by the manufacturer.
Your plan’s premium and what you pay for drugs that aren’t covered by your plan do not count towards your out-of-pocket expenses.
After you leave the coverage gap, you enter the catastrophic coverage stage where you only pay whichever is more for the rest of the year: 5% of drug costs, or a copay of $3.70 for generic drugs/$9.20 for brand-name drugs. Your Medicare Part D coverage resets to the pharmacy deductible stage on Jan. 1 of each new year.
Need help with your prescription drug coverage?
Medical Mutual members can call Customer Care at the number on their ID cards for assistance with their prescription drug coverage such as finding preferred pharmacies and sharing resources that can help manage prescription drug costs, like Medicare Extra Help.
Learn more about our Medicare Advantage plans with prescription drug coverage.
Disclaimer: The information provided is for educational purposes only. Please refer to your Part D plan documents for the specific information and benefit amounts that apply to your coverage.