Coverage Gap (drug plans)

Medicare drug plans do not offer continuous, unlimited drug coverage. Most plans cover you up to a certain dollar amount and then the coverage is greatly reduced. This is known as the coverage gap or the donut hole. During the coverage gap or donut hole, you will pay a higher percentage of the cost of covered drugs. How much you pay will depend on whether your drugs are covered brand-name or covered generic. You will continue paying until you have spent a certain amount which will bring you to the end of the coverage gap. Once you reach the end of the coverage gap, you will go back to paying copayments; this stage is known as Catastrophic coverage. With catastrophic coverage, you only pay a coinsurance amount or copayment for covered drugs for the rest of the benefit year.