Avoiding the Coverage Gap in Medicare Part D

The coverage gap happens when your Medicare Part D plan or Medicare Advantage (Medicare Part C) Prescription Drug plan has spent a certain total amount of money on your prescriptions in a given year. This is also known as your initial coverage limit and is important to factor into your planning.

When you’ve reached your coverage limit, you pay a higher portion of your prescription drug costs. After you’ve spent a certain amount more, you’ll reach the catastrophic coverage phase. Then you will pay only a small copayment or coinsurance for your covered medications for the rest of the year. This spending amount above your coverage limit and below the catastrophic coverage start is often called the “donut hole,” since your insurance coverage is much lower in this spending gap.

The lists of drugs covered by a Part D plan are listed in their formulary, which must be provided to you. Typically, this formulary will segregate drugs into different cost and reimbursement categories. The plan may also specify preferred pharmacy chains or mail order programs.

You can try to minimize your costs by

  • Changing from brand name drugs to generic drugs, which are usually much less expensive.

  • Using your plan’s mail-order prescription programs.

  • Choosing your plan’s in-network pharmacies.

  • Looking for discounted prescription prices through your Medicare plan membership.

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