As of January 1, 2025, the Medicare Part D "donut hole" (coverage gap) has been eliminated due to the Inflation Reduction Act. It has been replaced by a maximum $2,000 yearly out-of-pocket cap on prescription drugs. There is no specific private insurance policy designed to fill this gap because the gap itself no longer exists.
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 Medicare Part D donut hole (coverage gap) is officially gone as of January 1, 2025, eliminated by the Inflation Reduction Act (IRA), simplifying coverage into three phases: deductible, initial coverage, and catastrophic, with a new $2,000 out-of-pocket spending cap for covered drugs in 2025.
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.
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.
Here are some of the biggest Medicare mistakes to avoid:
Through 2024, if you spent a certain amount on prescription drugs, you'd enter the Part D "donut hole" or coverage gap. As of 2025, the Medicare Part D coverage gap is eliminated. Learn about important changes to Medicare Part D coverage that are happening in 2025.
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.
Medicare Part D income limits involve two different situations: lower limits for the Extra Help program (LIS) to reduce costs for those with low income and resources, and higher limits that trigger Income-Related Monthly Adjustment Amounts (IRMAA), meaning higher premiums for high-income earners, based on your prior year's tax return (e.g., 2024 income for 2026 costs). For Extra Help (LIS), income limits are around 150% of the Federal Poverty Level (e.g., ~$23,475 for an individual in 2025). For IRMAA, higher premiums start for individuals earning over $109,000 (or $218,000 joint) in 2024, with escalating surcharges for higher incomes.
Summary. The Medicare Part D donut hole was a term to describe the prescription coverage gap. However, as of 2025, Medicare closed the donut hole. Medicare replaced it with an out-of-pocket spending cap.
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").
Vermont, Utah and Minnesota topped the Commonwealth Fund's Medicare performance scorecard in 2025, whereas Kentucky, Mississippi and Louisiana struggled the most.
If you joined a Medicare Advantage Plan during your Initial Enrollment Period, you can change to another Medicare Advantage Plan (with or without drug coverage) or go back to Original Medicare (with or without a drug plan) within the first 3 months you have Medicare Part A & Part B.
Ask your physician or pharmacist if there is a generic drug available. Until the generic drug donut hole closes in 2024, check with your insurance to see whether the brand name or generic drug is more cost effective. Or see if there is a similar medication for the same medical condition available at a lower cost.
The Medicare donut hole went away in 2025
The Part D coverage gap, also known as the donut hole, was eliminated in 2025. This change impacted how enrollees budget for prescriptions, and it will do so in 2026 as well. The Medicare donut hole was a third phase of Medicare Part D prescription drug coverage.
Yes, there is a $2,000 annual cap on out-of-pocket prescription drug costs for seniors in Medicare Part D, which started in 2025 as part of the Inflation Reduction Act, with the cap increasing to $2,100 in 2026, automatically protecting all Part D enrollees from very high drug expenses.
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.