By the end of 2024, millions of Medicare beneficiaries will face a final, painful stretch of the donut hole-a coverage gap where out-of-pocket drug costs spike after your plan pays its share. But here’s the good news: starting January 1, 2025, the donut hole disappears completely. The $2,000 annual out-of-pocket cap kicks in, and you’ll pay nothing for covered drugs after that. If you’re currently in or approaching the gap, you have less than a year to prepare. This isn’t just about saving money-it’s about staying healthy when you can’t afford to skip doses.
What the Donut Hole Actually Means in 2024
The donut hole isn’t a mystery-it’s a phase in Medicare Part D where you pay more for prescriptions after your plan and you have spent a certain amount on covered drugs. In 2024, that threshold is $5,030 in total drug costs (including what you and your plan paid). Once you hit that number, you enter the coverage gap. For the rest of the year, you pay 25% of the cost for both brand-name and generic drugs. Sounds manageable? It’s not.Here’s why: while you pay 25%, the rest isn’t free. For brand-name drugs, the manufacturer gives a 70% discount, but that discount counts toward your out-of-pocket total. For generics, your plan pays 75%, and you pay 25%. That means if you’re taking expensive biologics like Humira or Repatha, you could be paying $800-$1,200 a month out of pocket. Many people skip doses, split pills, or delay refills just to make it through.
And here’s the twist: you don’t reach catastrophic coverage until you’ve spent $8,000 in total out-of-pocket costs (including manufacturer discounts). That’s a lot. For someone on a single high-cost drug, it can take months. For someone on multiple generics, it can take over a year.
How the $2,000 Cap Changes Everything in 2025
Starting January 1, 2025, the system gets simpler-and fairer. There’s no more donut hole. Instead, there are three phases:- Deductible phase: You pay up to $590 before your plan starts helping.
- Initial coverage phase: Your plan pays most of the cost until you’ve spent $2,000 out of pocket.
- Catastrophic coverage phase: Once you hit $2,000, you pay $0 for covered drugs for the rest of the year.
That’s it. No more guessing. No more surprise bills. If your total out-of-pocket spending hits $2,000, your drugs are covered for free until December 31. This change alone could save the average beneficiary nearly $1,000 a year, according to Kaiser Family Foundation analysis.
Manufacturers will still give discounts, but they’re changing. Instead of 70% off during the donut hole, they’ll give 10% off during initial coverage and 20% off during catastrophic coverage. That’s less than before, but it doesn’t matter anymore-you won’t hit the gap. The old discount system ends December 31, 2024.
What You Should Do Right Now (Before December 31, 2024)
You still have time to act. Don’t wait until you’re in the gap. Here’s what to do:1. Check Your Plan’s Formulary
Not all drugs are treated the same. Medicare plans group drugs into tiers. Tier 1 and 2 are usually generics with low copays. Tier 3 and 4 are brand-name or specialty drugs with higher costs. If you’re on a Tier 4 drug like Humira, you’re at risk of hitting the donut hole fast.Log into your plan’s website or call customer service. Ask: “Which tier is my medication on? What’s my copay before and after the coverage gap?” If your drug is on a high tier, you might be able to switch.
2. Ask About Generic Alternatives
Generic drugs cost 80-85% less than brand names. If your doctor says it’s safe, switching from brand to generic can save you $1,200 to $2,500 a year. For example:- Brand-name Lyrica (pregabalin) costs around $450/month.
- Generic pregabalin costs $25-$50/month.
That’s a $400-$425 monthly savings. Talk to your doctor. Don’t assume your current drug is the only option.
3. Use Manufacturer Patient Assistance Programs
Big drug companies have programs to help people afford their meds. These aren’t just for the poor-they’re for anyone struggling. Companies like Amgen, AbbVie, and Pfizer offer co-pay cards, free drug programs, or discounts that can drop your monthly cost from $500 to $5.Search for “[Drug Name] patient assistance program” online. Or call the company directly. Many have 24/7 helplines. One Medicare beneficiary in Florida reduced her Repatha cost from $560 to $5 per month using Amgen’s program. She didn’t know it existed until she was in the donut hole.
4. Get a 90-Day Supply
Many plans offer mail-order pharmacies that let you get 90-day supplies at lower copays. Instead of paying $100 every 30 days, you pay $250 for 90 days. That’s a 15-25% savings per refill. It also means fewer trips to the pharmacy and fewer chances to accidentally trigger the gap early.5. Apply for Extra Help (Low-Income Subsidy)
If your income is under $22,590 (single) or $30,660 (married), you may qualify for Extra Help. This federal program covers your Part D premiums, deductibles, and eliminates the donut hole entirely. In 2023, 12.6 million people got it. You can apply online at SSA.gov or by calling 1-800-772-1213. Even if you think you don’t qualify, apply. The rules are more flexible than most people think.6. Use the Medicare Plan Finder
Go to Medicare.gov/plan-compare. Enter your drugs, pharmacy, and zip code. Compare plans side by side. Look for the plan with the lowest total cost for your specific meds-not just the lowest monthly premium. People who optimize their plan choice save an average of $1,047 a year.7. Spread Out Your Purchases (If You Can)
If you’re close to the $5,030 threshold, you might delay refills until January 2025. For example, if you’ve spent $4,900 by November, hold off on your December refill until January. That way, your 2024 spending stays below the gap. But only do this if your doctor approves. Skipping doses is dangerous. This trick works only for stable conditions, not for insulin, blood thinners, or seizure meds.What Happens After January 1, 2025?
You won’t need to worry about the donut hole anymore. Your costs will be predictable. You’ll pay your deductible, then a set copay until you hit $2,000. After that, your drugs are free. You’ll still pay your monthly premium, but your drug costs are capped.Some experts warn that premiums might rise slightly for lower-income beneficiaries because manufacturers won’t be giving those big discounts anymore. But even if your premium goes up $5-$10 a month, you’ll still come out ahead if you’re taking expensive drugs.
Real Stories from People Who’ve Been There
One man in Ohio, 72, takes three specialty drugs for rheumatoid arthritis. In 2023, he spent $1,800 a month in the donut hole. He skipped doses for three weeks and ended up in the ER. His doctor said his condition worsened because of the delay. In 2024, he switched to generics and applied for manufacturer assistance. His out-of-pocket dropped to $200/month. A woman in Texas, 68, took Humira. Her plan didn’t cover it well. She started splitting pills to make them last. Her doctor caught on during a checkup. She didn’t know she could get help. She applied for Extra Help and got her drug for free. These aren’t rare cases. In 2022, 19% of Medicare Part D enrollees hit the donut hole. Of those, 68% said they changed how they took their meds because of cost.Don’t Wait Until It’s Too Late
The donut hole is disappearing. But it’s still here in 2024-and it’s still dangerous. If you’re taking high-cost drugs, you’re one missed payment away from a health crisis. You don’t need to suffer through it. You have tools. You have options. You have time.Start today. Check your formulary. Call your drugmaker. Ask your doctor about generics. Apply for Extra Help. Use the Medicare Plan Finder. Don’t assume your plan is the best one. Don’t assume you’re stuck. Millions of people have already done this-and saved thousands.
The system is changing. Don’t let it change you.
What is the Medicare Part D donut hole in 2024?
The Medicare Part D donut hole is a coverage gap that starts after you and your plan have spent $5,030 on covered drugs in 2024. Once you enter this phase, you pay 25% of the cost for both brand-name and generic medications. For brand-name drugs, the manufacturer gives a 70% discount, which counts toward your out-of-pocket total. You stay in the gap until your total out-of-pocket spending reaches $8,000, at which point you enter catastrophic coverage.
Will the donut hole still exist in 2025?
No. Starting January 1, 2025, the Medicare Part D coverage gap (donut hole) will be eliminated. Instead, there will be a $2,000 annual out-of-pocket spending cap. Once you hit that amount, you pay $0 for covered prescription drugs for the rest of the year. This change is part of the Inflation Reduction Act of 2022.
How can I save money on my prescriptions during the donut hole?
You can save money by switching to generic drugs, using manufacturer patient assistance programs, getting 90-day supplies through mail-order pharmacies, applying for Extra Help (Low-Income Subsidy), and comparing plans using the Medicare Plan Finder. These strategies can reduce your out-of-pocket costs by hundreds or even thousands of dollars annually.
What is Extra Help, and how do I qualify?
Extra Help is a federal program that lowers your Medicare Part D costs, including premiums, deductibles, and copays-and it eliminates the donut hole entirely. In 2024, you qualify if your income is below $22,590 (single) or $30,660 (married), and your resources are under $17,220 (single) or $34,360 (married). You can apply online at SSA.gov or by calling 1-800-772-1213.
Do manufacturer discounts count toward the $2,000 cap in 2025?
No. Under the new 2025 rules, manufacturer discounts on brand-name drugs will no longer count toward your out-of-pocket spending cap. Only what you actually pay-your copays and coinsurance-will count. This simplifies the system and makes it easier to track your progress toward the $2,000 limit.
Should I change my Medicare plan before 2025?
Yes, if your current plan has high costs for your medications. Even though the donut hole is ending, plan designs still vary. Use the Medicare Plan Finder to compare how much your specific drugs will cost under different plans in 2025. You might save hundreds by switching to a plan with better coverage for your meds.
Can I still use manufacturer coupons after 2024?
Yes, but they’ll work differently. After December 31, 2024, the old Coverage Gap Discount Program ends. Manufacturers will offer new discounts-10% during initial coverage and 20% during catastrophic coverage-but these won’t count toward your $2,000 cap. You’ll still benefit from lower prices, but your out-of-pocket spending will be based only on what you pay, not on discounts.
What if I can’t afford my meds even after the $2,000 cap?
If you’re still struggling, check if you qualify for state-specific programs like Medicare Savings Programs (MSPs), which help low-income beneficiaries pay premiums and out-of-pocket costs. Thirty-seven states offer these programs. You can also contact local Area Agencies on Aging or nonprofit groups like AARP for help finding additional support.
