What the Coverage Gap Is and When It Starts

The coverage gap in Medicare Part D is a period when you pay more of the cost of your prescription drugs yourself. It happens after you and your insurance plan have spent a certain amount of money on covered drugs in a single year. Once you enter the gap, your plan stops paying its share, and you pay a larger percentage of the drug cost until you reach a second spending threshold called "catastrophic coverage."

The coverage gap begins after combined spending — what you pay plus what your plan pays — reaches $5,730 in 2024. This dollar amount changes each year. Once you cross that threshold, you stay in the gap until your out-of-pocket costs alone reach $8,550 in 2024. Again, this number changes annually, so check your plan's materials for the current year's amounts.

Not everyone enters the coverage gap. If your drug costs are low, you may never reach the $5,730 threshold. But if you take multiple medications or expensive drugs, you could enter the gap within a few months.

Key Takeaways

  • The coverage gap begins when you and your plan have spent $5,730 combined on covered drugs in one year, and you exit when your own out-of-pocket costs reach $8,550.
  • In the gap, you typically pay 25% of the cost of brand-name drugs and 25% of generic drugs, though your plan pays nothing during this period.
  • Manufacturers' discount cards and patient information programs can reduce what you pay in the gap, but you must check with each drug's maker.
  • Once you reach catastrophic coverage, your plan pays most costs again, and you pay only a small copay or coinsurance.
  • The dollar amounts that trigger the gap and catastrophic coverage change every year, so review your plan's summary each January.

How Much You Pay During the Coverage Gap

During the coverage gap, you pay 25% of the cost of most covered drugs. This applies to both brand-name and generic medications. Your Part D plan does not pay anything during this period — the entire responsibility falls on you.

The 25% you pay counts toward your out-of-pocket maximum. Once your out-of-pocket spending reaches $8,550 in 2024, you leave the gap and enter catastrophic coverage. At that point, your plan resumes paying most of the cost, and you pay only a small copay (usually $3.95 to $9.85 per prescription, depending on the drug type) or 5% coinsurance, whichever is higher.

Some people find the gap manageable if they take only one or two drugs. Others face a sharp jump in monthly costs. A person taking a $300-per-month medication might suddenly owe $75 per month instead of their usual $10 copay.

Manufacturer Discounts and Patient information in the Gap

Drug manufacturers offer discount programs specifically for people in the coverage gap. These discounts reduce the price you pay at the pharmacy, and the discounted amount counts toward your out-of-pocket maximum. This means discounts help you exit the gap faster.

To use a manufacturer discount, you typically show a card or code at the pharmacy when you fill the prescription. You do not explore separately — the pharmacy handles it. However, you must check whether your specific drug has a discount program. Not all medications participate, and programs change.

Patient information programs run by drug makers can also help. These programs sometimes provide free or reduced-cost drugs to people who meet income requirements. Unlike discounts, information programs may not count toward your out-of-pocket maximum, so ask before enrolling. Contact the drug manufacturer directly or visit their website to learn what programs exist for your medications.

When Catastrophic Coverage Begins

Catastrophic coverage starts once your out-of-pocket costs reach $8,550 in 2024. From that point forward, your Part D plan pays most of the cost of your drugs for the rest of the calendar year. You pay only a small copay or 5% coinsurance, whichever is higher.

Catastrophic coverage is designed to protect you from unlimited drug costs. Without it, someone taking very expensive medications could face thousands of dollars in annual costs. With catastrophic coverage, your costs become predictable and manageable.

The catastrophic threshold resets on January 1 each year. If you reach catastrophic coverage in November, you will drop back into regular cost-sharing (or the gap) when the new year begins, unless you have already met the new year's out-of-pocket maximum.

How to Track Your Spending and Avoid Surprises

Your Part D plan sends you a statement each month showing how much you have spent and how much your plan has paid. This statement tells you whether you are approaching the coverage gap. Review it carefully, especially if you take expensive medications.

You can also call your plan's customer service number (on your insurance card) and ask where you stand. They can tell you exactly how much combined spending you have accumulated and how much more you need to reach the gap or exit it.

Some people use online tools or pharmacy apps to track their costs in real time. If you see that you are approaching the $5,730 threshold, you have time to explore manufacturer discounts, patient information programs, or generic alternatives before the gap begins.

Strategies to Reduce Costs in the Coverage Gap

If you know you will enter the coverage gap, talk to your doctor about generic alternatives. Generic drugs cost less and may help you stay below the gap threshold or move through it faster. Your doctor can also tell you whether switching to a different medication class might lower your costs.

Some people choose to use a different Part D plan during open enrollment (October 15 to December 7 each year). Plans vary in which drugs they cover and how much they charge. A plan with lower copays for your specific medications might keep you out of the gap entirely or reduce the time you spend in it.

If you have limited income, you may may have access to for Extra Help, a federal program that pays Part D premiums and reduces your out-of-pocket costs. Extra Help also eliminates the coverage gap for most people who receive it. Contact your local Social Security office or visit Medicare.gov to learn whether you may have access to.

What to Ask Your Doctor and Insurance Plan

Ask your doctor: "Are there generic versions of my medications that work just as well?" and "Could I switch to a different drug that costs less but treats my condition the same way?" Your doctor may not know the prices, but they can tell you which alternatives are medically equivalent.

Ask your Part D plan: "Which of my drugs have manufacturer discounts available?" and "Can you show me a year-to-date statement so I know how close I am to the coverage gap?" You can also ask whether switching to a different plan during open enrollment would reduce your costs.

Ask the drug manufacturer: "Does my medication have a patient information program, and what are the income limits?" This conversation takes five minutes and can save you hundreds of dollars.

When to Contact Medicare or Seek Help

Contact Medicare (1-800-MEDICARE) if your plan's statement does not match what you paid at the pharmacy, or if you believe you have been charged incorrectly. Medicare can investigate billing errors and work with your plan to correct them.

Seek help from a State Health Insurance information Program (SHIP) if you are confused about the coverage gap or need help choosing a plan. SHIP counselors are free, local, and trained to answer Part D questions. Find your state's SHIP at shiptalk.org or call 1-877-839-2675.

If you cannot afford your medications even with discounts and information, tell your doctor or pharmacist. They may know about other resources, or your doctor may be able to prescribe a different medication that your plan covers at a lower cost.

Frequently Asked Questions

Does the coverage gap explore to all Part D plans?

Yes. All standard Part D plans have the same coverage gap structure and the same dollar thresholds set by Medicare. However, some plans offer enhanced coverage that reduces or eliminates the gap for certain drugs. Check your plan's summary to see if it offers gap coverage.

If I use a manufacturer discount in the gap, does it count toward my out-of-pocket maximum?

Yes. The discounted price you pay counts toward your $8,550 out-of-pocket maximum, which means discounts help you exit the gap faster. Patient information programs may not count, so ask before enrolling in one.

Can I switch Part D plans if I am already in the coverage gap?

No. You can only change plans during open enrollment (October 15 to December 7) or if you have a may have access to life event like moving or losing other insurance. If you are in the gap and unhappy with your plan, note which plan you want for next year and switch during open enrollment.

What happens to my coverage gap progress on January 1?

Your spending resets to zero on January 1. Any money you spent in the previous year does not carry over. You start fresh with a new $5,730 threshold to reach the gap and a new $8,550 threshold to reach catastrophic coverage.

Is there a way to avoid the coverage gap entirely?

If your drug costs are low, you may never reach the $5,730 threshold. If you have limited income, Extra Help eliminates the gap for most people. Some plans offer enhanced coverage that reduces gap costs. Talk to your plan about your options, or contact SHIP for personalized guidance.