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What is the Donut Hole?
The Donut Hole (or Doughnut Hole) is a term used to describe the gap in the Medicare Part D plan coverage where the Medicare Part D plan participant (i.e., you) must pay 100% of the cost for your prescription drugs.
This break in coverage is also sometimes referred to as the Coverage Gap. The Donut Hole is the phase of your prescription drug plan where the total retail costs of medication range from $2510 to $5726.25 (in 2008 -- it changes each year). The Donut Hole can also be said to end when your true out of pocket expense (TrOOP) reaches $4050.
Some people have considered the Donut Hole as a second deductible before the plan's catastrophic coverage begins. In other words, the CMS model Medicare Part D plan for 2008 has a $275 deductible (100% paid by the individual) and then 75% coverage from $276 until $2510 (25% paid by the individual). Then, as noted, after $2510, the individual pays again 100% up to $5726.25. After $5726.25 the individual pays only 5% of the retail cost for their medications (or $2.25 for generics and $5.6 for brand medications, whichever is higher).
Certainly, not every plan follows the CMS model and some plans provide additional coverage to close up the Donut Hole so that the individual would not face the second 100% out of pocket expenses.
For example, some plans will provide coverage in the donut hole by using Generic Drugs with a copayment or alternatively, by using coverage of both Generic and Brand Drugs with a different copayment for each. These types of plans will usually be available for a higher monthly premium and may not be available in all regions.
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:: Click here to read more about Donut Hole Coverage
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Last updated on: 07/18/2008
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