What the donut hole is and where to look for details

The donut hole is a coverage gap in Medicare Part D (prescription drug coverage) that kicks in after you and your plan have paid a certain amount toward your drugs in a single year. Once you hit that threshold, you pay more out of pocket until your total spending reaches a second, higher threshold — then catastrophic coverage takes over and your costs drop again. It is called a "hole" because there is a period where your coverage temporarily shrinks.

The official place to read about how the donut hole works for your specific situation is Medicare.gov, which publishes the rules each year and lets you search by your plan. Your plan's own materials — the Summary of Benefits and Coverage document and the formulary (drug list) — also spell out exactly when the donut hole begins for you and what you will pay during it. If you want to talk through it with a person, your State Health Insurance information Program (SHIP) offers free counseling by phone.

Key Takeaways

  • Medicare.gov's Plan Finder tool shows you the donut hole threshold and your out-of-pocket costs for each drug under your specific plan.
  • Your plan's Summary of Benefits and Coverage document lists the exact dollar amount where the donut hole begins and ends each year.
  • Your State Health Insurance information Program (SHIP) offers free phone counseling to explain how the donut hole affects your costs.
  • Certain groups — people with low incomes, those on dialysis, and others — may have the donut hole reduced or eliminated under their plan.

Using Medicare.gov to find your donut hole details

Start at Medicare.gov and use the Plan Finder tool (found under the "Find Care Providers" section). Enter your zip code, the drugs you take, and your pharmacy, and the tool will show you plans side by side. For each plan, you will see the donut hole threshold — the dollar amount where your coverage gap begins — and what you will pay for each drug once you enter it.

The Plan Finder also shows you when you exit the donut hole and enter catastrophic coverage, where Medicare picks up most of the cost. This is the clearest way to see the real numbers for your situation, because the donut hole threshold and your share of the cost change year to year.

Reading your plan documents for donut hole information

Your plan mails you a Summary of Benefits and Coverage each year, usually in September or October. This document lists the donut hole threshold in a table — look for language like "coverage gap" or "donut hole." It will show you the exact dollar amount where the gap begins and where it ends, and what percentage or fixed amount you pay for drugs while you are in it.

Your plan's formulary (the list of covered drugs) also notes which drugs have different costs in the donut hole versus before it. Some plans offer better prices on certain drugs during the gap, so checking the formulary can show you whether switching to a different drug might lower your costs.

Getting free counseling from your State Health Insurance information Program

Every state runs a State Health Insurance information Program (SHIP) that offers free, confidential phone counseling about Medicare, including the donut hole. SHIP counselors can walk you through how the donut hole works for your specific drugs and plan, help you understand what you will pay at each stage, and suggest ways to lower your costs.

To find your state's SHIP, go to Medicare.gov and search "State Health Insurance information Program," or call 1-800-MEDICARE (1-800-633-4227) and ask for your state's SHIP number. Counseling is free and takes about 20 to 30 minutes.

Special programs that reduce or eliminate the donut hole

If you have a low income, you may be covered under the Low-Income Subsidy (LIS) program, which reduces or eliminates the donut hole entirely. You can check whether you may have access to by going to Medicare.gov, calling 1-800-MEDICARE, or visiting your local Social Security office.

Some people on dialysis, those with end-stage renal disease, and those with certain other conditions also have the donut hole reduced under their plan. Your plan's Summary of Benefits and Coverage will note if you fall into one of these groups. If you think you might, ask your doctor or call your plan directly to confirm.

Tracking your spending to know when you hit the donut hole

Your plan sends you an Explanation of Benefits (EOB) each time you fill a prescription. The EOB shows what you paid, what the plan paid, and how much of your annual out-of-pocket spending counts toward the donut hole threshold. Keep these or check your plan's online account to watch your total climb.

Once you are close to the threshold, your plan is required to send you a notice telling you that you are about to enter the donut hole. This is a good time to talk to your doctor about whether any of your drugs have cheaper alternatives, or to call your SHIP counselor to review your options.

Frequently Asked Questions

Does everyone with Medicare Part D hit the donut hole?

No. You only enter the donut hole if your total drug costs (what you and your plan pay together) reach the threshold set by your plan that year. If your drugs are inexpensive or you have low-income subsidies, you may never hit it. Your Plan Finder tool shows whether you are likely to based on your current drugs.

Can I switch plans to avoid the donut hole?

You can switch plans during the Annual Enrollment Period (October 15 to December 7 each year), and some plans have lower donut hole thresholds or better coverage in the gap. Use the Plan Finder to compare plans and see which one costs least for your specific drugs over the whole year, including the donut hole period.

What happens to my costs after I leave the donut hole?

Once your total out-of-pocket spending reaches the catastrophic threshold (a higher dollar amount set each year), you enter catastrophic coverage. At that point, Medicare pays most of your drug costs, and you pay only a small copay or coinsurance. Your plan's Summary of Benefits shows this threshold.

Can my doctor help me lower my donut hole costs?

Yes. Your doctor can switch you to a drug that costs less during the donut hole, or ask your plan for a prior authorization exception if a cheaper drug would not work as well for you. Some plans also offer patient information programs. Ask your doctor or pharmacist whether these options exist for your drugs.