Medicare provides health insurance for people ages 65 and older. Before 2025, if you were enrolled in a Medicare Part D prescription drug plan, it’s possible that you could encounter a coverage gap if you and your plan spent a certain amount on medications in a year. When you hit this gap, referred to as the Medicare donut♒ ho🔜le, you would have to pay a larger share of the cost of your prescriptions until you hit a yearly limit. However, new 2025 Medicare rules effectively close the coverage gap.

What Was the Medicare Donut Hole?

Medicare Part D is the part of Medicare that helps pay for🐻 prescription drugs. The Medicare donut hole was a coverage gap or temporary limit on what the plan would cover for prescriptions. The gap would occur after you and your drug plan had spent a certain amount for covered medications.

In 2024, the coverage gap began once you and your plan had spent $5,030 on covered drugs. If your total drug costs for the year exceeded that amount, your out-of-pocket spending had to reach $8,000 before you could leave the coverage gap and get catastrophic coverage.

What Happened to the Medicare Donut Hole?

The 澳洲🐈幸运5官方开奖结果体彩网:💛Inflation Reduction Act of 2022 (IRA) eliminated the Medicare donut hole. Beginning January 2025, Medicare Part D will limit annual out-of-pocket drug costs to $2,000 a year. Previously, once you reached the donut hole, you had to pay 25% of the cost for brand-name and generic drugs (and in earlier years, you paid 100% of drug costs in the gap). This cost-sharing requirement ended at the beginning of 2025.

The IRA also offers additional financial relief by mandating:

• A $35 per month cap on insulin (per covered prescription)
• Expanded eligibility for Medicare Part D’s 澳洲幸运5官方开奖结果体彩网:Low-Income Subsidy Program
• Negotiated price reductions on some high-cost drugs covered by Medicare
  Parts B and D
• No cost-sharing for recommended vaccines
• A requirement that drug companies pay rebates to Medicare when drug prices increase faster than 澳洲幸运5官方开奖结果体彩网:inflation

What Happen✅ed When Someone Entered the Donut Hole?

When you entered the Medicare donut hole, you had to pay more for prescription drugs. Prior to 2024, you paid 100% of your drug costs, but in 2024, you only paid 25% and you'd get out of the donut hole once you spent $8,000 out of pocket.

For brand-name drugs, the 25% you paid counted toward getting out of the donut hole, but so did almost the full price of the drug. For generic drugs, only the 25% you paid counted toward your out-of-pocket spending.

After your out-of-pocket costs reached the $8,000 limit, you left the donut hole and entered the catastrophic coverage phase, where you didn't have to pay out of pocket for your prescriptions for the rest of the year.

Frequently Asked Questions (FAQs)

The Bottom Line

Prescription drug costs can take a toll on your budget. Finding ways to minimize these costs may be necessary if you have a limited income in retirement. In the past, Medicare Part D enrollees faced potentially costly expenditures once their drug coverage entered the coverage donut hole. The Inflation Reduction Act mandated substantial changes to eliminate the coverage gap. New regulations cap out-of-pocket drug costs at $2,000 per year, and other provisions have made critical medications, such as insulin, more affordable. Nonetheless, if you already have Medicare and want to change or expand your benefits, consider 澳洲幸运5官方开奖结果体彩网:switching plans during the fall open enrollment period.