Medicare donut hole 2020
Most Medicare drug plans have a coverage gap or “donut hole”. If you reach the Medicare donut hole 2020, it means that you have a temporary limit on what your drug plan will cover for your prescriptions.
Some people do not enter the coverage gap/donut hole. The only time you enter the gap is when both yourself and your drug plan reach the annual spending amount. The Medicare donut hole 2020 amount is $4,020. This amount applies to only covered drugs in. This amount may change each year.
Keep in mind; if you are on Medicare and get Extra Help paying for Part D, you will not enter the coverage gap/donut hole.
There are 3 levels of coverage with Medicare Part D:
- You are in the the initial coverage stage before you reach the coverage gap. Last year, in 2019, the initial coverage limit was $3,820. The initial coverage limit has been raised up to $4,020 for 2020.
- The second level is when you reach the coverage gap/donut hole. You will be on this level once your Medicare approved prescription drug plan expenses reach the initial coverage limit. Medicare has changed the percentage you pay for your medications during the coverage gap. In 2019, Medicare members had to pay 25% for brand-name prescriptions and 37% for generic medications. The percentage members have to pay for Medicare prescription drug plans in 2020 will be 25% for both brand-name as well as generic prescriptions.
- The third level is called the catastrophic coverage level. You reach this level only if you have reached the annual out-of-pocket threshold. This amount is calculated by using all the money you paid for prescriptions for the year, including what you pay during the coverage gap. If you reach this level, Medicare will cover at least 95% of the cost for your medications for the rest of the year. The out-of-pocket threshold for Part D in 2020 is $6,350.
Important information if you use brand-name prescription drugs:
Once you reach the coverage gap/donut hole in 2020, you will not have to pay more than 25% of the cost for brand-name prescription drugs that are covered by your plan. You will be entitled to this discounted rate if you either buy your prescriptions at a pharmacy or order them through the mail. Certain plans offer you even lower costs when you reach the coverage gap. The discount will come off the agreed price your plan has set with the pharmacy for that specific drug.
Although you pay no more than 25% of the price for brand-name drugs, almost the full price of the drug will count towards your out-of-pocket expenses. This will help you get out of the coverage gap. In other words; both what you and what the manufacturer pays (95% of the cost of the drug) counts toward your out-out-pocket spending.
If you need help choosing a Medicare Advantage, Medicare supplement of Prescription drug plan, feel free to use our Medicare quoting tool below: