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Medicare Donut Hole

Medicare Part D is regulated by the Federal Government and can change from one year to the next. The dollar amounts for the Donut Hole can also change year to year and only pertain to Medicare Part D. The Center for Medicare and Medicaid Services sets the minimum guidelines for Part D and all insurance carriers offering Part D plans must follow these guidelines exactly. This means that the Donut Hole coverage will not vary based on the insurance carrier. Medicare Part D Plans vary only in cost as well as which drugs will be covered on their formulary.

All drug plans have 4 stages, which are standardized nationwide.

Stage 1 – Deductible

Most stand-alone Medicare Part D plans have a deductible that must be met before the plan starts paying. For 2020, most Medicare Part D plans have a $435, one time, annual deductible. This amount must be met by the member before any of the plan benefits begin. Some plans may have a lower deductible. Typically if the deductible is lower, the plan premium is higher. And if the deductible is as high as $435, the premium will likely be lower.

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Stage 2 – Initial Coverage

During this stage, Medicare sets aside $4,020 per person, in total drug costs for the year. This includes both the beneficiary’s cost + the insurance company’s cost. Here, the beneficiary would pay only copays up to $4,020. If this amount is reached, stage 3 begins.

Stage 3 – Coverage Gap (Donut Hole)

In the gap, the beneficiary would then be responsible for 25% coinsurance for both brand-name and generic drugs. After total out-of-pocket drug costs reach $6,350 in 2020, they enter stage 4.

Stage 4 – Catastrophic Coverage

If this stage is reached, the beneficiary would pay only a small coinsurance amount or copayment for ALL covered drugs for the remainder of the calendar year. These dollar amounts can change each year and would start over in January of the next year no matter what.

*There are a number of Medicare Part D plans offered in each state. Fortunately, we can assist you with evaluating the plans available in your area, and based on your individual medications. We’ll help you determine which drug plans offer the specific medications you need at the lowest cost.

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