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Donut hole
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The donut hole refers to a coverage gap in Medicare prescription drug coverage plans. After the insured individual and the plan have paid a certain amount for prescription drugs, the insured must pay for all costs out of pocket up to a yearly limit, after which the plan begins paying again. The donut hole is expected to be phased out by 2020.[1]
Overview
Prior to the Affordable Care Act, Medicare beneficiaries with prescription drug coverage (Part D) often had a gap in such coverage referred to as the "donut hole." This coverage gap was a period in which the beneficiary was between their initial coverage limit and their catastrophic-coverage threshold. In this gap, the insured had no coverage and had to pay for all drug costs out of pocket until they reached the catastrophic-coverage threshold, at which point Medicare began contributing again. The Affordable Care Act authorized a $250 rebate within three months of reaching the coverage gap to assist with payments. Changes in Medicare coverage under the ACA were expected to phase out the donut hole by 2020.[1][2]
In 2010, the U.S. Department of Health and Human Services estimated that one quarter of Medicare Part D participants stopped taking their drug regimen when they entered the donut hole.[3]
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