Coverage Gap

What is the Medicare Part D Coverage Gap?

The Medicare Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... coverage gap, also known as the donut hole, is one of the four phases of a Medicare Part D plan. The other phases of Part D coverage include:

• DeductibleA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share. period:  Plan members are responsible for the full price of their prescription drugs until retail spending reaches the Part D plan’s annual deductible.
• Initial coverage period (ICL): Once the deductible is met, the plan will cover a portion of the cost and the member will be responsible for a copaymentA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service. or coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. . This continues until retail spending reaches the annual ICL.
• Coverage gap: This is the third phase of coverage.
• Catastrophic coverage: All Part D plans provide catastrophic coverage when a member’s out-of-pocket costs reach the annual catastrophic spending limit.  This sum includes what a member pays for covered medications. In this phase, a member pays significantly lower copays and coinsurance. 

In the Part D coverage gap phase, a plan member pays higher cost-sharing for their prescription drugs. This continues until their spending reaches the level needed for catastrophic coverage. The coverage gap starts when a member and the plan have paid a set dollar amount for prescription drugs during that year.