Medicare Donut Hole Explained, Tepsick Insurance, The Villages, Fl

Medicare Part D’s “Donut Hole” Coverage Gap

By: Yvonne Tepsick, Independent Insurance Agent, Tepsick Insurance

To help Medicare beneficiaries pay for the high cost of medications, Medicare offers prescription drug coverage, run by Medicare approved insurance agencies. A prescription drug coverage plan can make the prescription drugs you may need for a chronic illness or medical condition more affordable.

In 2020, some Medicare prescription plans may have a deductible of $435. If your plan does have a deductible, you can expect to pay the first $435 of your tier 3, 4 or 5 drugs. Once you meet your deductible, your plan will act like any other plan without a deductible. This is referred to as the initial coverage stage. 

Depending on the amount you pay for drugs covered under your Part D plan, you may experience a temporary coverage limit, also known as the “donut hole”. In 2020, this gap starts after the cost of your medications to the insurance company reaches $4,020 on covered drugs. Catastrophic Coverage begins after you have paid $6,350 for your covered drugs. 

After you reach the “donut hole,” you’ll pay more of your drug costs out-of-pocket. You may be responsible for 15% of your plan’s cost for brand-name prescription drugs and 44% for generic drugs. 

The Coverage Gap Doesn’t Affect Everyone 

Some Medicare recipients may not experience the coverage gap. Healthier individuals or people who purchase generic drugs may not spend up to $4,020 on prescription drugs, while others may have Extra Help. Extra Help is a specialized federal program that helps people living on a limited income. 

If you qualify, Extra Help eases the costs of coverage. “Full” Extra Help provides you with insurance coverage throughout the year (with no gap) and allow you to pay far less  for prescriptions. “Partial” Extra Help offers coverage throughout the year, as well as a reduced deductible and premium. Partial Extra Help will also pay up to 15% of the cost of your prescription drugs. 

How To Leave The Coverage Gap

What you pay in out-of-pocket costs will help you eventually exit the coverage gap. While you’re in the “donut hole,” Medicare has a predetermined limit to what you pay from your own wallet. Medicare not only notes what you’re paying for prescription drugs but also considers your yearly deductible, your co-insurance and your co-payments toward this out-of-pocket limit. 

In addition, catastrophic coverage begins automatically when you reach the out-of-pocket limit of $6,350 during the coverage gap. When catastrophic coverage is in effect, you’ll have a smaller amount to pay in co-insurance or co-payments for the remaining months of the year. 

Open Enrollment Has Started

If you’d like more information about the “donut hole’ coverage gap or are interested in changing to a different Medicare plan, you can do so during open enrollment, which will take place between October 15th and December 7th. 

For more information or to make an appointment, please call  Yvonne Tepsick at 352-350-6663 or email me at  As an independent insurance agent, I’ll help you to examine your current coverage and find a good plan for your unique health needs. 

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