Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs.
Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $3,820 on covered drugs in 2019 ($4,020 in 2020), you're in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.
Brand-name prescription drugs
Once you reach the coverage gap, you'll pay no more than 25% of the plan's cost for covered brand-name prescription drugs. You get these savings if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer higher savings in the coverage gap. The discount will come off of the price that your plans has set with the pharmacy for that specific drug.
Although you'll pay no more than 25% of the price for the brand-name drug, 95% of the price—what you pay plus the 70% manufacturer discount payment—will count as
which will help you get out of the coverage gap. These items aren't counted toward your out-of-pocket spending:
- What the drug plan pays toward the drug cost (5% of the price)
- What the drug plan pays toward the dispensing fee (75% of the fee)
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price. The discount for brand-name drugs will apply to the remaining amount that you owe.
In 2019, Medicare will pay 63% of the price for generic drugs during the coverage gap. You'll pay the remaining 37% of the price. For 2020 and beyond, Medicare will pay 75% of the price for generic drugs during the coverage gap, and you'll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price.
Items that count towards the coverage gap
- Your yearly , coinsurance, and copayments
- The discount you get on brand-name drugs in the coverage gap
- What you pay in the coverage gap
Items that don't count towards the coverage gap
- The drug plan
- Pharmacy dispensing fee
- What you pay for drugs that aren’t covered
If you think you should get a discount
If you think you've reached the coverage gap and you don't get a discount when you pay for your brand-name prescription, review your next "Explanation of Benefits" (EOB). If the discount doesn't appear on the EOB, contact your drug plan to make sure that your prescription records are correct and up-to-date.
If your drug plan doesn't agree that you're owed a discount, you can file an appeal.