What is commonly referred to as the "donut hole" in Medicare Part D?

The term "donut hole" refers to a specific gap in coverage within the Medicare Part D prescription drug plan. After beneficiaries reach an initial coverage limit on their total drug costs, they find themselves in this coverage gap where they must pay a higher share of their medication expenses out-of-pocket. This occurs until they reach a catastrophic coverage threshold, at which point their costs for drugs will significantly decrease again.

Understanding this component of Part D is crucial for beneficiaries as it can significantly affect their overall drug costs annually. This gap may have implications for their healthcare budget and management, making it essential to be aware of how it functions and how beneficiaries can navigate it effectively.