Understanding Medicare Part D Coverage Gaps

understanding medicare part D coverage gaps

What is Medicare Part D and what are the coverage gaps?

Medicare Part D is prescription drug coverage for Medicare recipients. It can be purchased as a stand-alone insurance plan for those who chose the path of Original Medicare or be incorporated into a Medicare Advantage Plan. Medicare Part D is optional coverage. If you do need drug coverage in retirement, then understanding the coverage gaps these plans have is important to prevent unnecessary expenses.

Medicare Donut Hole
Click to Enlarge - Medicare Donut Hole Infographic

Medicare Part D Gaps for 2020

Each year, Medicare announces the various costs of Medicare Part D plans. For 2020, the costs are:

  • The standard deductible in Medicare Part D will increase from $415 to $435. This is paid by the enrollee before any coverage is provided.
  • The average monthly premium for a standard Part D drug plan is $32.70, a decrease of 45¢. Although it’s likely no drug plan will have this premium, it establishes the Part D late enrollment penalty. 
  • The discount for both brand-name and generic medications in the donut hole (Catastrophic Coverage) will be 75% (See Attached infographic for an explanation of the donut hole.) 
  • Medicare has increased the limit for entering the donut hole (Coverage Gap) from $3,820 to $4,020 and increased the threshold for getting out of the donut hole is $6,350, up from $5,100. (The Coverage Gap limits are set by a formula established in the 2003 drug plan law involving the negotiated value of prescription drug costs.)
  • The beneficiary’s cost sharing in the Catastrophic Coverage phase will be the greater of 5% or $3.60 (up 20¢) for generic drugs and $8.95 (up 45¢) for brand-name medications. 

What You Need To Know About Medicare Part D Coverage Gaps

Having the wrong Medicare Part D coverage can be costly. Let us help you find the right Medicare Part D coverage plan for your unique situation with one of our customized Medicare RoadMaps when you are enrolling for coverage for the first time or our Medicare Part D open enrollment review.

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