Costs in the coverage gap (2024)

FAQs

What does cost-in-coverage gap mean? ›

This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $5,030 on covered drugs in 2024, you're in the coverage gap.

For example, if you fill a brand-name prescription prescription that costs $100, and only $50 of that cost is in the coverage gap, the discount and increased coverage will only apply to that $50.

The Medicare Part D donut hole or coverage gap is the phase of Part D coverage after your initial coverage period. You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit. In 2024, that limit is $5,030.

In the donut hole, you pay up to 25% out of pocket for all covered medications. You leave the donut hole once you've spent $8,000 out of pocket for covered drugs in 2024. 2024 is the last year for the donut hole. A $2,000 out-of-pocket cap takes effect for Medicare Part D in 2025.

Stuck in the donut hole? If you reach the coverage gap and can't afford your medications, look up discounts for those medications on GoodRx. There's a good chance you can save a significant amount in the long run, especially if you know you won't be able to meet the $8,000 out-of-pocket maximum.

The full plan fee (both the amount you pay and the discounted amount) count toward your total out-of-pocket-costs, which helps move you through the Coverage Gap Stage. You also receive some coverage for generic drugs in the Coverage Gap. You pay no more than 25% of the cost for generic drugs and the plan pays the rest.

Gap insurance may also be called "loan/lease gap coverage." This type of coverage is only available if you're the original loan- or leaseholder on a new vehicle. Gap insurance helps pay the gap between the depreciated value of your car and what you still owe on the car.

This number includes the 1.5 million adults in the coverage gap and an additional 1.4 million uninsured adults with incomes between 100% and 138% FPL, most of whom are currently eligible for Marketplace coverage but not enrolled (Figure 7 and Table 1).

Some residents with low income are falling through the resulting “coverage gap” — their incomes are too high to qualify for their state's Medicaid program but too low to qualify for marketplace plan subsidies, thereby impeding their access to health care.

When your loan amount is more than your vehicle is worth, gap insurance coverage pays the difference. For example, if you owe $25,000 on your loan and your car is only worth $20,000, your gap coverage covers the $5,000 gap, minus your deductible.

What does gap insurance exclude? ›

Gap insurance does not cover repairs on your vehicle, a down payment on a new vehicle, rental car fees while your vehicle is in the shop, and any interest, fees, or penalties accrued from your specific situation.

A gap exception is when an insurance payor covers an out-of-network provider at an in-network rate. Network gap exceptions happen when there is a gap in coverage (aka a network deficiency).

If you have limited income and resources, you may want to see if you qualify to receive Medicare's Extra Help/Part D Low-Income Subsidy. People with Extra Help see major savings on their drug plans and medications at the pharmacy, and do not fall into the donut hole.

You may have heard or read that the Medicare donut hole ended or closed. The federal government made changes to the Medicare donut hole, shrinking the gap over several years. But there aren't any Medicare Part D plans without a donut hole. All Part D plans still include the coverage gap stage.

If you don't get premium-free Part A, you pay up to $505 each month. If you don't buy Part A when you're first eligible for Medicare (usually when you turn 65), you might pay a penalty. Most people pay the standard Part B monthly premium amount ($174.70 in 2024).

The amount of time you spend in the donut hole depends on the cost of your covered drugs and the benefits of the Part D plan you selected. Not everyone will get to the Medicare donut hole. If you do, you stay there until you've spent a specific amount for covered drugs. This amount changes each year.

This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Once you have spent up to the yearly limit, your coverage gap ends and your drug plan helps pay for covered drugs again.

In order to leave the “donut hole,” your total out-of-pocket costs must reach $8,000. If you hit this number, then you enter the catastrophic payment stage. Your plan pays most of the cost for your drugs in the catastrophic stage.

You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit beyond your initial coverage period threshold. You reach the Medicare Part D donut hole for 2024 when you and your plan have paid $5,030 for your medications.