Medicare Part D: What is the Donut Hole?

Medicare Part D is the part of your Medicare insurance that will assist you in paying for your prescription drugs that you need to survive.  With Medicare Part D you will receive a certain contribution from Medicare to pay for part of the drugs and you will be expected to contribute the difference.  However, in recent years more and more attention has been given to the Medicare Part D donut hole.  So, just what is the Medicare Part D donut hole?

With Medicare Part D you have a deductible you have to meet and you will pay for all of your drug costs up to this deductible.  After you have met your Medicare Part D deductible you will then be eligible for some help from Medicare.  Generally, Medicare Part D will start to pay for about 75% of your prescription drugs and you will be asked to make up the other 25%. 

After you have reached a pre-determined limit set by Medicare Part D you will then be expected to pay, again, for 100% of the drug costs up to another limit.  This is the “donut hole” that is referred to by pundits and critics of Medicare Part D.  It is called a “donut hole” due to the large hole in the coverage.

Once you have covered the gap in your Medicare Part D donut hole you then get help again, generally much more than you did the first time.  In most cases you will now pay somewhere around 5% of the total cost of your prescription drugs.