Medicare glossary. Get free Medicare quotes

Toll-free help

Or click to call 1-855-593-5633

Medicare Glossary

Definitions for common Medicare terms

donut hole

DEFINITION: Medicare’s “donut hole” refers to the coverage gap in your Medicare Part D prescription drug benefit – the point where your prescription drug expenses exceed the initial coverage limit of your plan, but have not yet reached the catastrophic coverage level. When you reach this “donut hole,” you stop making a 25 percent copayment and begin paying more of your costs.  In 2015, you enter the donut hole when your out-of-pocket expenses reach $2,960, and you reach the catastrophic coverage level (ie, get out of the donut hole) after you have paid $4,700 out of pocket, including your $320 deductible, copays, and the manufacturer discount that you receive while in the donut hole.  At that point, your plan pays most of your prescription drug expenses through the end of the year.

The Patient Protection and Affordable Care Act included a provision to close the donut hole by 2020.  In 2015, while in the donut hole, enrollees pay 45 percent of the cost of brand name drugs and 65 percent of the cost of generic drugs.  By 2020, there will be no donut hole – enrollees will pay 25 percent of all drug costs until they reach the catastrophic coverage level.