You can't entirely avoid the Medicare Part D "donut hole" (coverage gap) in all plans, as it's built-in, but you can significantly reduce the risk or how much you spend by using generics, comparing plans yearly, talking to your doctor about cheaper alternatives, and applying for the Extra Help program for low-income individuals, which can eliminate the gap entirely for qualifiers. Focusing on cost-saving strategies for your prescriptions is key to staying out of the gap.
First, you can opt for generic medications instead of name-brand ones. Second, see if your doctor can give you free samples, and third, you might consider paying cash for your more expensive meds. These are just a few of the things you can do to avoid the donut hole stage.
Tips on How to Avoid the Donut Hole Coverage Gap
Discuss lower-cost drug alternatives with your healthcare professionals. Seek out discounts on medications. Choose generic drugs over brand-name drugs. Opt for in-network pharmacies only.
The Medicare Part D donut hole or coverage gap phase of coverage no longer exists as of December 31, 2024. It was the coverage phase after the initial coverage period when you owed a higher or different percentage of the cost of your drugs.
GoodRx can't be used in combination with Medicare, but it can be used in place of Medicare. You may want to consider using GoodRx instead of Medicare when Medicare doesn't cover your medication, when you won't reach your annual deductible, or when you're in the coverage gap phase (“donut hole”) of your Medicare plan.
As of 2025, the Medicare Part D “donut hole” no longer exists – meaning there is no longer a coverage gap during which Part D enrollees face higher drug costs. The “donut hole” was eliminated thanks to provisions of the Affordable Care Act (ACA) and the Inflation Reduction Act (IRA).
Yes, the Biden administration, through the Inflation Reduction Act (IRA) signed in 2022, eliminated the Medicare Part D "donut hole" (coverage gap) as of January 1, 2025, replacing it with a simpler structure that includes a $2,000 out-of-pocket cap on drug costs for the year, after which beneficiaries pay nothing for covered drugs. This change means beneficiaries now move directly from initial coverage to catastrophic coverage, simplifying costs and providing significant financial relief.
In the donut hole, you pay a percentage of the cost for your prescription drugs. For generic drugs, you pay 25% of the cost of the drug and dispensing fee, and your plan pays the remaining cost.
Through patient assistance programs, pharmaceutical manufacturers provide financial assistance or free drug products to those who are uninsured or commercially insured and meet their income eligibility guidelines.
Your CalPERS health coverage will automatically be canceled the first day of the month after you turn 65. Review Cancellation of CalPERS Health Coverage for information on reinstating your health coverage.
It's important to know that starting in 2025, the Part D donut hole is eliminated. Instead, once your out-of-pocket prescription drug costs reach $2,000, you enter the catastrophic coverage phase—and pay nothing for covered medications for the rest of the year.
The Inflation Reduction Act (IRA) signed by President Biden in 2022 will eliminate the Prescription Drugs Coverage Gap (known as the donut hole) for Seniors in 2025. Most Medicare drug plans have a coverage gap (also called the "donut hole").
How do you close the coverage gap and get out of the donut hole?
Here are some of the biggest Medicare mistakes to avoid:
The Coverage Gap stage, or “donut hole,” is going away in 2025. You will now have 3 drug payment stages as part of your Part D benefit: Deductible, Initial Coverage, and Catastrophic Coverage. The Gap Phase (also known as the donut hole) is being removed in 2025.
You enter the catastrophic phase if you've spent a certain amount of money for covered medicines. During this stage, you'll pay nothing for your covered Part D drugs. The Coverage gap phase, known as the Medicare donut hole, was eliminated in 2025 due to changes implemented by the Inflation Reduction Act (IRA).
The cost of drugs purchased under GoodRx will not count against your coverage limit - thus keeping you out of the donut hole longer. It's important to note that the amount you pay when using GoodRx does not automatically count towards your deductible or getting you out of the donut hole either.
For 2026, the standard Medicare Part B premium is $202.90/month, an increase from 2025, with higher premiums for higher incomes (IRMAA), and the Part A deductible is $1,736, while Part D drug plan base costs start around $38.99/month, with potential surcharges for high earners. These costs are set by CMS and reflect rising healthcare expenses, impacting beneficiaries across Original Medicare (A & B) and Medicare Advantage/Part D plans.
The donut hole of no coverage finally closed for good in 2020, having phased out in 2019 for brand-name drugs and in 2020 for generic drugs. Sign up for the latest health news, fitness and nutrition updates and more!
In 2025, the out-of-pocket limit for Medicare Advantage plans may not exceed $9,350 for in-network services and $14,000 for in-network and out-of-network services combined. These out-of-pocket limits apply to Part A and B services only, and do not apply to Part D spending.
The $2,000 drug cap, part of the Inflation Reduction Act for Medicare Part D, limits your annual out-of-pocket spending on covered prescription drugs to $2,000 (increasing slightly in future years, e.g., $2,100 in 2026). Once you hit this limit, your plan pays 100% for the rest of the year, meaning you pay nothing for approved medications after reaching the cap. This cap automatically applies to deductibles, copays, and coinsurance, but not monthly premiums, and it provides significant relief for those with high drug costs, like cancer patients, by eliminating the previous catastrophic coverage phase cost-sharing.