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Medicare Glossary

Definitions for common Medicare terms

catastrophic coverage

DEFINITION: Catastrophic coverage refers to the point when your total prescription drug costs for a calendar year have reached a set maximum level ($4,700 in 2015). At this point, you are out of the prescription drug “donut hole” and your prescription drug coverage begins paying for most of your drug expenses.  Once you’ve reached the catastrophic coverage threshold for the year, you’ll only pay $2.65 for generic drugs and $6.60 for brand names, or 5 percent of the total drug cost, whichever is higher.