Medicare Donut Hole
Categories: Insurance
The Medicare donut hole refers to a time period of Medicare Part D (the Medicare prescription drug benefit, which is optional) when consumers have to pay more for their prescription drugs than before. Remember: Medicare is for when you’re old and retired, so it's different than Medicaid.
The Medicare Part D “donut hole” is also called the “coverage gap.” That’s because Medicare Part D goes through four different stages each year, with each stage having different rules re: how much help you’ll be getting for your meds.
Stage one is easy-breezy, in stage two you only pay the copay for your meds, and stage three (the donut hole) is when you pay a higher percentage of your own prescription meds. The earlier stages are paid for partially by you, but a lot by an insurer, who is let off the hook a bit in stage three when the majority of the cost burden falls on you. They help you with costs more again in stage four to, uh...complete the donut.
The gap is there to keep the program cheap for the government and to incentivize the elderly to find cheaper prescriptions...even as prescription drug prices skyrocket. The good news? The Medicare donut hole has been slowly getting smaller and smaller, and should be completely gone in 2020 (though who knows what will happen in future years, since some of this was included in the Affordable Care Act).