How much is cost sharing for prescription drug coverage when someone enters the “coverage gap” (also known as the “donut hole”)?
Medicare Part D prescription drug coverage is divided into four distinct phases, each with a specific dollar amount that serves as a threshold leading into the following phase: (1) deductible phase, (2) initial coverage period, (3) coverage gap or “donut hole” phase, and (4) catastrophic coverage period.
Phase 1: In the deductible phase, individuals are responsible for paying the full negotiated price for their prescription drugs, until they reach a specific deductible amount. In 2024, this amount is $545. Once this amount has been reached, the individual moves into the next phase of coverage.
Phase 2: In the initial coverage period phase, both the individual and their health plan collectively pay towards out-of-pocket prescription drug costs, until they reach a specific amount, called the out-of-pocket threshold. In 2024, this amount is $5,030. Once this amount has been reached, the individual moves into the next phase of coverage.
Phase 3: In the coverage gap or “donut hole” phase, the individual is required to pay up to 25 percent of the costs of their prescription drugs (both brand name drugs and generics), until they reach a specific amount, called the out-of-pocket spending threshold. In 2024, this amount is $8,000. Once this amount has been reached, the individual moves into the final phase of coverage.
Phase 4: In the catastrophic coverage period phase, individuals pay zero copayments and coinsurance for their prescription drugs for the remainder of the plan year (effective January 1, 2024).
Find more information about costs in the coverage gap on the CMS website.