Understanding the 2021 Medicare Donut Hole: Tips to save and manage the coverage gap

Coverage Status
You/Medicare
Your Actual Drug Cost Your Out-of-Pocket Cost
Deductible Period

You pay all/Medicare pays none

$0-$445 $0-$445
Coinsurance/Copayment Period

You pay 25%/Medicare pays 75%

$445-$4,130 $445-$1,358.75
Coverage Gap Period

You pay all/Medicare pays none

$4,130-$9,348.75 $1,358.75-$6,550
Catastrophic Period

You pay 5%/Medicare pays 95%

over $9,348.75 over $6,550

*The example above shows 2021 calendar year costs for covered drugs in a plan that meets Medicare’s standards in 2021.  Your costs may vary since each Medicare drug plan is structured differently. Plans may vary depending on deductible and copays.

Deductible Period: You pay the first $445 of actual drug costs before Medicare coverage begins to pay.

Coinsurance/Copayment Period: You pay your coinsurance or copayment amount until the actual drug costs reach $4,130. Note: This does not mean your out-of-pocket will be $4,130. The actual drug cost of $4,130 is based on your out-of-pocket plus what Medicare pays.

Coverage Gap Period (Donut Hole): You pay your drug costs until the total out-of-pocket reaches $6,550, including amounts paid earlier during the deductible and coinsurance/copayment period. The most you will pay while in the coverage gap is $5,219. In 2021, you will receive a 75% discount on covered brand and generic drugs during the coverage gap. Check with your plan to see if your drugs are eligible for the discount.

Catastrophic Coverage Period: You pay the reduced coinsurance or copayment amount set by your Medicare drug plan for the remainder of the year. Note: People who have limited income and resources and qualify for full Extra Help or have additional coverage aren’t affected by the coverage gap and would continue to pay the same copayment amount for each prescription.

TIPS TO BRIDGE THE COVERAGE GAP – DONUT HOLE

If your drug plan features a coverage gap, here are tips to help you save money, time and frustration:

  • Switch to Alternative Medications Lower in Cost: Ask about generic, over-the-counter or less-expensive brand-name drugs that are equivalent to medications you now take. Switching to lower-cost drugs may help you avoid the coverage gap and save you hundreds or thousands of dollars a year.
  • Always Use Your Medicare Drug Plan Card: Use your drug plan card, even while in the coverage gap, to ensure you receive your discounted rates, and the money spent will count toward catastrophic coverage.
  • Explore National and Community-Based Charitable Programs: Organizations like the National Patient Advocate Foundation or National Organization for Rare Disorders may have programs to assist with drug costs. Visit www.benefitscheckup.org for information about federal, state, and private assistance available in your area.
  • Research Pharmaceutical Assistance or Patient Assistance Programs: Many drug manufacturers offer assistance for people enrolled in a Medicare drug plan. Discover if this program is available for medications you take by visiting www.medicare.gov and selecting “Your Medicare Costs” and visiting “Get Help paying costs.”
  • Look at State Pharmaceutical Assistance Programs (SPAP): There are 23 states and 1 territory offering some type of coverage to help people with Medicare pay for drug plan premiums and/or cost sharing. Find out if your state has a SPAP by visiting www.medicare.gov/pharmaceutical-assistance-program/#state-programs or calling 1-800-MEDICARE.
  • Apply for Extra Help: If you receive Medicare and have limited income and resources, you may qualify for assistance with your prescription costs. To verify your eligibility, contact Social Security by visiting www. socialsecurity.gov or calling 1-800-772-1213.
  • Before 2022 Plan Selection: Consult with your pharmacy provider who can help you explore plans that offer the broadest coverage for you. This may change each year. During open enrollment, between October 15 – December 7, you can join, switch or drop your plan. Your pharmacy provider may then help you identify medication alternatives to save money; track drug expenses and liabilities and let you know before you hit the donut hole. This will help eliminate confusion and financial surprise.
  • For More Information: All Medicare drug plans are different, so call your individual plan if you have questions about your coverage gap. For help finding additional resources and free personalized counseling, call your State Health Insurance Assistance Program. To obtain the correct phone number, call 1-800-MEDICARE (1-800-633-4227 or visit www.medicare.gov and select “Phone Numbers and Websites” under the “Forms, Help, & Resources” tab.