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Medicare Update – Part D “Donut Hole” Reduction

May 08, 2019

When Medicare Part D was created (prescription drugs), insurance covered prescription drugs up to a specific amount. Then the second tier was out of pocket, and a third tier restarted with insurance coverage.

In 2018, it worked as follows:

  • Insurance coverage – $3,750
  • Out of pocket – $3,751 – $5,000 35% out of pocket for name brands and 44% for generics
  • Insurance coverage restarts – Over $5,000 out of pocket no more than 5%

This coverage gap is called the Donut Hole.

The gap has been declining since the passage of the Affordable Care Act. In 2020, out of pocket expenses for the Donut Hole was to be reduced to 25% of the cost. With the passage of the 2018 Budget, the change was accelerated to 2019.

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