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Key takeaways
Prior to 2025, Medicare Advantage plans that included Part D coverage had a coverage gap (or “donut hole”).
In 2025, the Medicare donut hole was eliminated.
Medicare Advantage plans with Part D coverage now have three phases: deductible, initial coverage, and catastrophic coverage.
Medicare Advantage plans are privately offered plans that bundle Medicare Part A (inpatient hospital insurance), Part B (outpatient medical insurance), and usually Part D (prescription drug coverage). If you’re familiar with Medicare Part D, then you know about the Part D coverage gap, which was also known as the “donut hole.” However, the Medicare donut hole was eliminated on Jan. 1, 2025, for both Part D and Medicare Advantage plans.
RELATED: Medicare Part D vs. Medicare Advantage
What was the Medicare donut hole?
All Medicare Part D prescription drug plans used to have a coverage gap known as the “donut hole,” which temporarily limited the amount of drug costs that were covered.
There are coverage phases for Medicare Part D beneficiaries during the calendar year determined by the federal government.
Before the elimination of the donut hole, the coverage stages used to include the following:
- Initial coverage stage: You paid the full cost of your prescriptions until you met your deductible.
- Coverage kicks in: You were responsible for copayments on your prescriptions until the combined amount both you and your plan paid for medications for the year reached $5,030.
- Donut hole or coverage gap: At this point, you would pay 25% of the cost of your prescriptions (generic drugs and brand-name drugs) until your total out-of-pocket costs for the year equaled $8,000.
- Catastrophic coverage: After reaching a total out-of-pocket cost of $8,000 on covered drugs, you paid no further cost-sharing.
As of January 2025, the new coverage phases include: deductible, initial coverage, and catastrophic coverage. Once a beneficiary spends $2,000 on covered drugs, they go straight to catastrophic coverage and pay $0 for covered drugs for the rest of the year.
Does the donut hole apply to Medicare Advantage?
The Medicare donut hole was eliminated from all Medicare plans, including Advantage plans.
RELATED: Drugs covered by Medicare
How to save more money on Medicare
To lower healthcare and prescription drug costs, apply for additional savings opportunities like Medicare Extra Help, Medigap policies, and Medicare Savings Programs.
Before enrolling in Medicare, review the covered prescription drugs under the formulary sections of different Medicare plans and choose the plan that covers the medications you take. Browse plans on medicare.gov.
RELATED: How to compare Medicare Advantage plans
Additionally, you can follow these steps to save money on prescriptions while you’re on Medicare:
- Compare prices at different pharmacies. If you search for your drug on singlecare.com, you’ll also be able to compare discounts at pharmacies near you.
- Look for manufacturer discounts, state pharmaceutical assistance programs, and patient assistance programs offered by various drug manufacturers and nonprofit organizations to help offset costs.
- Use a free SingleCare prescription discount card. Although SingleCare cannot be used in addition to any Medicare plan, you may choose to use SingleCare instead of Medicare in situations where SingleCare offers a better price on your prescription drugs. Before going to the pharmacy to pick up your prescriptions, visit SingleCare to see what your discount would be. Paying for drugs with SingleCare is a great way to lower costs while you’re in the donut hole. However, it’s important to note that any prescriptions you purchase using your SingleCare discount will not apply toward your Medicare Part D coverage limit.