The Coverage Gap

Understanding the Medicare Coverage Gap

Prescription medications can be an essential part of maintaining your health, especially as you age. For those with Medicare prescription drug coverage (Part D), it’s important to understand a key term that often causes confusion — the Coverage Gap.

What Is the Coverage Gap?

The coverage gap is a stage in your Medicare Part D plan where there is a temporary limit on what your plan will pay for prescription drugs. This means that after you and your plan have spent a certain amount on covered prescriptions, you may be responsible for a larger share of the costs until you reach the next phase of coverage.

In other words, once you hit the spending threshold, the coverage gap — a gap where your out-of-pocket costs may increase temporarily.

How the Coverage Gap Works

Each year, Medicare sets limits on how much you and your plan can spend before you enter and exit the coverage gap.

In 2025, for example, you enter the coverage gap after total drug costs (what you and your plan have paid combined) reach $5,030. Once in the gap, you’ll pay up to 25% of the cost for both brand-name and generic drugs until your out-of-pocket spending hits the next limit — catastrophic coverage.

After reaching the catastrophic coverage threshold, your costs decrease significantly, and your plan begins to pay most of the expenses for the rest of the year.

What Counts Toward Leaving the Coverage Gap

The following payments help you move out of the donut hole:

  • Your out-of-pocket costs for covered prescriptions

  • Discounts on brand-name drugs provided by manufacturers

  • What you pay during the gap

Payments that don’t count include your plan’s monthly premium or what your plan pays for covered drugs.

How to Prepare for the Coverage Gap

Being aware of how the coverage gap works can help you better plan your prescription costs for the year.
Here are a few helpful tips:

  • Review your plan each year. Drug prices and plan coverage can change annually.

  • Talk to your doctor or pharmacist. Ask about lower-cost alternatives or generics that can reduce your out-of-pocket expenses.

  • Check for Extra Help. If you have limited income and resources, you may qualify for financial assistance through Medicare’s Extra Help program.

In Summary

While the coverage gap can seem confusing, understanding how it works allows you to manage your medication costs more effectively. Knowing when you might enter the coverage gap — and what steps you can take to minimize its impact — ensures that your prescription coverage continues to work for you throughout the year.

Jocelyn Wolf