Most people with Part D will receive an automatic 50 percent discount on brand-name prescription drugs and a 14 percent discount on generic prescription drugs while you're in the Part D coverage gap. (Your discounts may be different depending on the type of Part D plan you are enrolled in.) You don’t have to apply for the discount or fill out any extra paperwork — and the discounts will keep growing until 2020, when the coverage gap disappears.
Frequently asked questions about the Medicare Part D coverage gap
What is Medicare Part D?
Medicare is the federal health insurance program for people 65 and older and for some younger people with disabilities. Medicare offers insurance coverage that helps people pay for their prescription drugs through Medicare drug plans and Medicare Advantage plans. This insurance coverage is known as Medicare Part D.
What is the Medicare Part D coverage gap?
When your total drug costs exceed a certain amount ($2,930 in 2012), you fall into the Medicare Part D coverage gap or “doughnut hole.” While you’re in the coverage gap, your costs will depend on a number of factors as explained in the answers below. When your out-of-pocket costs for drugs reach a certain amount ($4,700 in 2012), you leave the coverage gap and qualify for “catastrophic coverage.” At that point, you're responsible for just 5 percent of your prescription drug costs for the rest of the year.
How will I know if I’ve reached the coverage gap?
Every month that you fill a prescription, your Medicare Part D drug plan mails you an explanation of benefits (EOB) notice. The EOB tells you how much you've spent on Medicare Part D-covered prescription drugs. This EOB will also tell you if you’ve reached the coverage gap.
Who can get the coverage gap discounts?
If you're enrolled in a Medicare prescription drug plan — or a Medicare Advantage plan that includes prescription drugs — you can get discounts on the drugs that are covered by your plan once you’re in the coverage gap. (Check the details of your Part D plan to see if you'll receive the additional discounts in the coverage gap.)
If you receive Extra Help (a Medicare program that helps people with limited resources pay their prescription drug costs), you don't have a coverage gap — so you don’t need the discount.
How does the 50 percent discount work for brand-name drugs while I’m in the coverage gap?
In 2012, once you reach the coverage gap, you will automatically get a 50 percent discount on your brand-name prescription drugs at the time you buy them. However, the actual price you pay for an individual drug will vary based on your Medicare Part D plan. The discount will be applied to the price that your Part D plan has negotiated with the companies that manufacture your drugs. Keep in mind that you will need to pay any pharmacy fees associated with filling a prescription. These are also known as “dispensing fees" and are not included in your discount.
Here’s an example: Mrs. Smith reaches the coverage gap. She goes to her pharmacy to fill a prescription for a Medicare Part D-covered brand-name drug. The price for the drug is $100 and the dispensing fee is $2. Once the 50 percent discount is applied, the cost of the drug is $50. The $2 dispensing fee is then added to the $50 discounted amount. Mrs. Smith will pay $52 for the prescription.