📋 Does Medicare Part D Have a Donut Hole for Drug Costs? (AARP Article - updated)

[Winter2025VA]

FROM THE ARTICLE:

By Kimberly Lankford, AARP.

*** There are 2 Comments on the AARP website. Stop by to add yours. ***

Published June 16, 2022.

➡️ Updated January 24, 2025. ⬅️

No the infamous donut hole — when Medicare beneficiaries with Part D prescription drug coverage had to pay 100 percent of their drug costs until they reached a certain threshold — has closed.

Also gone is the less intense but still steep coverage gap, which occurred when you and your drug plan reached $5,030 spent on covered medications in 2024 and you had to pay up to 25 percent of the cost for covered drugs, more out of pocket than in your initial coverage period.

USE THE LINK BELOW TO READ THE ARTICLE: https://www.aarp.org/medicare/faq/donut-hole-coverage-gap.html

[papawofboo]

I never have understood why people called it that or how it worked. I just know that when you reached it you had 3 choices. 1: pay it and take medicine. 2: Don't pay it and not take medicine. 3: call doctor and tell him to find something cheaper. I used #3 several times last year.

[Winter2025VA]

[Tuesday 3/18/25] @papawofboo , I would have to use Option 3 maybe as I NEED my Blood Pressure and Chlolestral refiils. But I am "working" on getting off BOTH.  👍  As always, I APPRECIATE you joining in these discussions. Take care, Nicole  👵

---

[*** @papawofboo wrote 3/18/25:

I never have understood why people called it that or how it worked. I just know that when you reached it you had 3 choices. 1: pay it and take medicine. 2: Don't pay it and not take medicine. 3: call doctor and tell him to find something cheaper. I used #3 several times last year. ***]

---

[GailL1]

Yea, isn’t that GREAT - problem is it helps those who are using these very high priced drugs and the rest of us are paying more - OH, well - that’s the way of insurance always plays out.

[Winter2025VA]

[Tuesday 3/18/25] @GailL1 , help me to understand the Donut Hole in "simple" terms. Thanks!!! In year 2 of Medicare and just now heard about this when I saw the AARP Article. An interesting name - lol, I guess coverage has a HOLE like a donut maybe??? I do APPRECIATE all your help in this Medicare Forum.  👍As usual, NO pressure to respond. Take care, Nicole  👵

---

[*** @GailL1 wrote 3/18/25:

Yea, isn’t that GREAT - problem is it helps those who are using these very high priced drugs and the rest of us are paying more - OH, well - that’s the way of insurance always plays out. ***]

---

[GailL1]

@Winter2025VA 

There isn’t a donut hole anymore only a max out of pocket spending amount.

The "donut hole," was a coverage gap, in Medicare Part D prescription drug plans, which existed until the end of 2024.  It was a temporary phase where enrollees face a higher share of medication costs after meeting a certain spending threshold, before entering catastrophic coverage. In 2025, the donut hole was eliminated, and Medicare Part D plans now have a $2,000 out-of-pocket limit. 

Basically, Medicare Part D worked like this with the donut hole.Your Medicare prescription drug costs changed over the course of the year, depending on how much you’ve already spent.

• Under Medicare Part D, you would have been in one of four phases: deductible phase; initial coverage phase; “donut hole,” or coverage gap phase; and catastrophic coverage phase.

• In the “donut hole,” or coverage gap, you pay no more than 25% of your prescription costs plus 25% of the pharmacy dispensing fee, which typically adds $1 to $3 for each prescription fill.

• You get out of the donut hole once your total out-of-pocket spending and other payments on your behalf for the year hit $8,000 in 2024.

• once you reached the catastrophic phase, you only paid 5% of med cost.

The problem was that the cost of some meds was so high that even in the catastrophic phase at 5% of cost, the med was still high so you could imagine what the 25% cost in the donut hole was.

Every year the max was readjusted but problem was the cost of these meds also was increasing so it nothing ever seem to help with the cost these folks were paying who were on this really expensive med.

Now what changed - the government definitely was not gonna pick up more of the cost so then it came down to the manufacturers and the insurance companies - they are paying more now BUT who do you think that cost is passed along to - right me and you and other people who had a Medicare Part D - in Traditional Medicare or in a MAPD plan.

[Winter2025VA]

[Tuesday 3/18/25] @GailL1 , I have Traditional Medicare. Thanks for answering my question. Nicole  👵

---

[*** @GailL1 wrote:

@Winter2025VA 

There isn’t a donut hole anymore only a max out of pocket spending amount.

The "donut hole," was a coverage gap, in Medicare Part D prescription drug plans, which existed until the end of 2024.  It was a temporary phase where enrollees face a higher share of medication costs after meeting a certain spending threshold, before entering catastrophic coverage. In 2025, the donut hole was eliminated, and Medicare Part D plans now have a $2,000 out-of-pocket limit. 

Basically, Medicare Part D worked like this with the donut hole.Your Medicare prescription drug costs changed over the course of the year, depending on how much you’ve already spent.

• Under Medicare Part D, you would have been in one of four phases: deductible phase; initial coverage phase; “donut hole,” or coverage gap phase; and catastrophic coverage phase.

• In the “donut hole,” or coverage gap, you pay no more than 25% of your prescription costs plus 25% of the pharmacy dispensing fee, which typically adds $1 to $3 for each prescription fill.

• You get out of the donut hole once your total out-of-pocket spending and other payments on your behalf for the year hit $8,000 in 2024.

• once you reached the catastrophic phase, you only paid 5% of med cost.

The problem was that the cost of some meds was so high that even in the catastrophic phase at 5% of cost, the med was still high so you could imagine what the 25% cost in the donut hole was.

Every year the max was readjusted but problem was the cost of these meds also was increasing so it nothing ever seem to help with the cost these folks were paying who were on this really expensive med.

Now what changed - the government definitely was not gonna pick up more of the cost so then it came down to the manufacturers and the insurance companies - they are paying more now BUT who do you think that cost is passed along to - right me and you and other people who had a Medicare Part D - in Traditional Medicare or in a MAPD plan. ***]

---