The doughnut hole is a coverage gap in Medicare Part D prescription drug plans

The doughnut hole is a temporary period each year when Medicare Part D stops paying its share of your prescription drug costs, and you pay more out of pocket. It kicks in after you and your plan have spent a certain amount on covered drugs — in 2024, that threshold is $5,850 — and it ends once your total out-of-pocket spending reaches $8,550. During this gap, you pay the full price of most drugs, though you still get a discount on brand-name medications.

The doughnut hole exists because of how Medicare Part D is structured. Your plan pays a share of drug costs up to the initial threshold, then coverage pauses while you cover the gap yourself, and then catastrophic coverage kicks in once you hit the out-of-pocket limit. This means if you take expensive medications, you could face months of higher costs in the middle of the year.

The exact dollar amounts change each year, so you should check your plan's summary of benefits or call your plan directly to confirm the current thresholds. These numbers explore to standard Part D plans; some plans with different designs may have different gaps or no gap at all.

Key Takeaways

  • The doughnut hole is a coverage gap that begins after you and your plan spend $5,850 on covered drugs in 2024, and it ends once your out-of-pocket costs reach $8,550.
  • During the gap, you pay the full price of most drugs, though brand-name medications come with a manufacturer discount that reduces what you owe.
  • Generic drugs are usually cheaper than brand-name drugs, so switching to a generic during the doughnut hole can lower your costs significantly.
  • Extra Help (also called the Low-Income Subsidy) eliminates or greatly reduces the doughnut hole for people with limited income and resources.
  • Reviewing your medications and plan choice each year during the open enrollment period can help you avoid or minimize doughnut hole costs.

How the doughnut hole affects your monthly costs

Before you enter the doughnut hole, your Part D plan covers a percentage of your drug costs after you meet your deductible. Once the combined spending by you and your plan reaches $5,850, your plan's coverage pauses. From that point until your out-of-pocket costs hit $8,550, you pay the full price of your medications — or close to it.

The impact depends on which drugs you take. If you use one or two inexpensive generic medications, you might never reach the doughnut hole threshold. If you take multiple brand-name drugs or expensive biologics, you could enter the gap in the summer or early fall and stay there for several months. During those months, your monthly prescription costs can jump significantly.

Once you reach $8,550 in out-of-pocket spending, catastrophic coverage begins. At that point, Medicare and your plan cover most of the cost of your drugs for the rest of the year, and you pay only a small copay or coinsurance.

Generic drugs and the doughnut hole

Switching to a generic drug during the doughnut hole is one of the most direct ways to lower your costs. Generic medications contain the same active ingredients as brand-name drugs and work the same way in your body, but they cost far less. If you take a brand-name drug that costs $200 per month, the generic version might cost $20 or $30.

Talk to your doctor or pharmacist about whether a generic alternative exists for each of your medications. Some drugs do not have generics yet, but many common medications do. Your pharmacist can tell you the price difference between the brand-name and generic versions at your pharmacy, so you can see exactly how much you would save.

You can make this switch at any time, but it is especially valuable during the doughnut hole months when you are paying the full price anyway. Even after the doughnut hole ends and your plan resumes coverage, staying on a generic can lower your copays and help you avoid the gap in future years.

Extra Help and other programs that reduce or eliminate the doughnut hole

Extra Help, officially called the Low-Income Subsidy, is a federal program that pays some or all of your Part D costs if your income and resources fall below certain limits. If you receive Extra Help, the doughnut hole is either eliminated entirely or greatly reduced, depending on your income level. You pay little to nothing during the gap period.

To learn whether you may be may be able to access for Extra Help, contact Social Security at 1-800-772-1213 or visit ssa.gov. You can also ask your local Area Agency on Aging or a Medicare counselor through your State Health Insurance information Program (SHIP) to help you understand whether you may have access to. The income and resource limits vary by state and change each year.

Some Medicare Advantage plans (Part C) include prescription drug coverage and may have a different structure with no doughnut hole or a smaller gap. If you are concerned about doughnut hole costs, comparing Medicare Advantage plans during open enrollment might reveal options with better drug coverage for your specific medications.

Planning ahead during open enrollment

Open enrollment runs from October 15 to December 7 each year, and it is the time to review your current plan and consider switching to a different one. This is when you should look at your medications and estimate whether you will hit the doughnut hole in the coming year.

Use the Medicare Plan Finder tool at Medicare.gov to see how much each plan would cost you for your specific drugs. Enter your medications, dosages, and pharmacy, and the tool will show you the estimated costs under each plan, including whether you would enter the doughnut hole and how much you would pay during the gap. Some plans have lower deductibles or higher initial coverage limits, which can delay when you enter the gap.

If you know you will hit the doughnut hole no matter which plan you choose, use open enrollment to find a plan with the lowest catastrophic coverage costs, since that is where you will land once you spend $8,550 out of pocket. You might also ask your doctor whether any of your medications have patient information programs or manufacturer coupons that can help during the gap months.

What happens after you leave the doughnut hole

Once your out-of-pocket costs reach $8,550 in a calendar year, you enter catastrophic coverage. At this point, Medicare and your plan cover most of the remaining cost of your drugs, and you pay only a small copay (usually $3.95 to $9.85 for generic drugs and $9.85 to $24.70 for brand-name drugs in 2024) or a small percentage of the cost, whichever is higher.

Catastrophic coverage continues through December 31. On January 1, the counter resets, your deductible applies again, and the cycle begins anew. This means if you reach catastrophic coverage in November or December, you will have only a few weeks of low-cost coverage before the year ends and you start over.

Understanding this cycle helps you plan your medication refills. Some people time their prescriptions to take advantage of catastrophic coverage at the end of the year, filling larger quantities of expensive drugs in November or December when their out-of-pocket costs are lowest.

Manufacturer discounts on brand-name drugs in the doughnut hole

Even though you pay the full price of brand-name drugs during the doughnut hole, manufacturers often offer discounts that reduce what you actually owe at the pharmacy. These discounts are separate from your insurance plan and are available to anyone in the doughnut hole, regardless of income.

The discount typically covers 50% of the cost of brand-name drugs during the gap, though the exact percentage varies by drug and manufacturer. Your pharmacist can tell you whether a discount is available for your medication and how much it will reduce your cost. You do not have to do anything special to receive the discount — your pharmacy applies it automatically when you fill the prescription.

These discounts count toward your out-of-pocket spending limit, so they help you move through the doughnut hole faster and reach catastrophic coverage sooner. If you take brand-name drugs, ask your pharmacist about available discounts before you decide to switch to a generic.

Frequently Asked Questions

Can I avoid the doughnut hole by choosing a different Medicare plan?

Some Medicare Advantage plans have no doughnut hole or a smaller gap than standard Part D plans. You can compare plans during open enrollment using the Medicare Plan Finder tool. However, plans with better drug coverage may have higher premiums or different doctor networks, so you need to weigh the trade-offs for your situation.

Does the doughnut hole amount change every year?

Yes. The dollar thresholds for when the doughnut hole begins and ends are adjusted each year based on inflation. In 2024, the gap begins at $5,850 and ends at $8,550, but these numbers will be different in 2025. Check your plan's summary of benefits or Medicare.gov for the current year's amounts.

What if I cannot afford my medications during the doughnut hole?

Talk to your doctor or pharmacist about generic alternatives, which are usually much cheaper. Ask about manufacturer discounts and patient information programs. Contact your State Health Insurance information Program (SHIP) for free counseling about your options. If you have limited income, ask about Extra Help, which can reduce or eliminate your doughnut hole costs.

Does the doughnut hole explore to all prescription drugs?

The doughnut hole applies to most covered drugs under Part D, but not to vaccines, certain preventive medications, or drugs covered under Part B (like chemotherapy or biologics given by injection at a doctor's office). Your plan's formulary lists which drugs are covered and how the doughnut hole affects each one.

If I switch plans in the middle of the year, does my doughnut hole progress carry over?

No. If you switch plans, your spending counter resets with your new plan. This means you could enter the doughnut hole twice in one year if you switch plans at the wrong time. For this reason, it is usually best to choose your plan during open enrollment and keep it for the full year unless your circumstances change significantly.