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What is the Medicare Part D Donut Hole?

There have been some changes in the Payment Stages of the Medicare Part D Prescription Drug Plans for 2024. There are four stages starting with the annual deductible. Many plans only have a deductible for name brand drugs while waiving the deductible for generic drugs. The maximum deductible is set this year at $545. This amount can vary and some plans, typically with a higher monthly premium, may waive the deductible for the name brand drugs as well. Here's what you'll pay:

Up to $545           Deductible Stage – During this stage, if your plan has a deductible, you’ll pay the plan’s negotiated drug cost up to the deductible limit.  The deductible is the amount you will pay first before the plan’s benefits start.  The maximum deductible for 2024 is $545, set by CMS. 

Up to $5030         Initial Coverage Stage – During this stage, the plan will pay its share of the cost and you’ll pay a copayment or coinsurance (your share of the cost) for each description based on each drug’s tier.  Once the total cost of your prescriptions (Your out-of-pocket copays Plus the amount the plan pays) reaches $5,030 (2024), you enter the Coverage Gap (also called the Donut Hole).


Up to $8,000        Coverage Gap Stage – During this stage, you’ll pay 25% of the cost of generics and brand name drugs until the True costs of your drugs, which now consists of your copays plus what the plan pays plus the manufacturer’s drug discount, reach $8,000 (2024).


Rest of the year Catastrophic Phase - $0 copays for covered drugs on the plan’s formulary for the duration of the calendar year.

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