Part D plans have up to four coverage phases throughout a year, each with different out-of-pocket costs: deductible, initial coverage phase, coverage gap and catastrophic coverage phase. Both the threshold and the ceiling in the coverage gap can change each year. Then you’ll enter the catastrophic coverage phase. You’ll stay in the gap until you’ve spent $7,400 out of your own pocket during the year. In 2023, Part D plans can have a deductible of up to $505 although many plans don’t have any deductible. That number includes any deductible you must pay before a plan will cover your prescriptions. In 2023, you’ll hit the coverage gap when you and your insurance company have paid $4,660 in total for your medications during a year. However, after you and your Medicare Part D prescription drug plan have spent a certain amount for your medications each year, you still must pay up to 25 percent of the cost of covered drugs. Discounts from drug manufacturers and government payments helped to cover more costs over several years. The Affordable Care Act enacted in March 2010 gradually reduced the share of costs people had to pay in the donut hole starting in 2011. The donut hole finally closed for good in 2020, having been phased out in 2019 for brand-name drugs and then in 2020 for generic drugs. The average out-of-pocket costs continued to rise, reaching $1,858 in 2010 until the donut hole started to close the following year. Those who didn't get coverage from the Extra Help financial assistance program paid an average of $1,701 in out-of-pocket drug costs for the year. You then had to pay 100 percent of the cost of covered drugs until you spent a total of $3,850 out of your pocket for the year.Ĭatastrophic coverage phase still exists. After spending $3,850 of your own money in 2007, you reached the catastrophic coverage level and then paid a small portion of your prescription costs.Ī Kaiser Family Foundation study found that 32 percent of Part D enrollees reached the donut hole in 2007. In 2007, the first full year of the Part D program, you hit the donut hole after you and your insurance company paid $2,400 in drug costs. But some people had significant out-of-pocket costs even after they bought Part D coverage. The donut hole, some spell it “doughnut,” was a part of Medicare’s prescription drug benefit from its beginning in 2006, three years after Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act.īefore Part D was introduced, Medicare beneficiaries typically had to pay all costs for their prescriptions not included in Medicare Part B unless they had coverage from another source, such as retiree insurance or a Medigap plan. No donut hole, but now a coverage gap. Part D plans, federally regulated but sold by private insurers, may require you to pay a larger share of the cost for covered drugs after your drug costs reach a certain limit. En español | No, the infamous donut hole - when Medicare beneficiaries with Part D prescription drug coverage reached a certain level and then had to dig out by paying 100 percent of their drug costs out of pocket until they reached a certain threshold - has closed.
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