Understanding the Medicare Part D Donut Hole in 2025

brandonwashington10
Apr 11
2 min read

If you have a Medicare Part D prescription drug plan, you may have heard the term "donut hole" or coverage gap. It’s a temporary limit on what your drug plan will cover for medications. As of 2025, some important changes are coming that could affect your out-of-pocket costs. Here's what you need to know about the Medicare Part D donut hole in 2025.

What Is the Donut Hole?

The donut hole is the coverage gap that occurs after you and your plan have spent a certain amount on covered drugs, but before you reach catastrophic coverage.

Phases of Part D Coverage:

Deductible Phase – You pay 100% of drug costs until you meet your deductible.
Initial Coverage Phase – Your plan pays most of the cost, and you pay copays/coinsurance.
Donut Hole (Coverage Gap) – You pay a larger share of your drug costs.
Catastrophic Coverage – Your out-of-pocket costs significantly drop.

2025 Part D Donut Hole Changes

Thanks to the Inflation Reduction Act, major changes are coming in 2025:

Out-of-Pocket Spending Cap

A new $2,000 annual cap on out-of-pocket costs for prescription drugs will go into effect in 2025.
Once you hit the $2,000 threshold, you won’t pay anything more for covered drugs that year.

No More 5% Coinsurance in Catastrophic Phase

Previously, you had to pay 5% of drug costs even in the catastrophic phase.
Starting in 2025, this coinsurance will be eliminated—your plan will cover 100% beyond the $2,000 cap.

How the Donut Hole Works in 2025

While the donut hole technically still exists as a phase, the new cap will help beneficiaries avoid high out-of-pocket drug costs. Here’s a breakdown:

You and your plan share costs during the initial coverage phase.
When your total drug spending hits a certain amount, you enter the donut hole.
You continue to pay a share of drug costs until your out-of-pocket total hits $2,000.
After that, you pay nothing for the rest of the year.

How to Prepare for 2025

✅ Review your Part D plan during Open Enrollment (Oct 15 – Dec 7) to make sure it still fits your needs.

✅ Use generic and preferred drugs to stay below the out-of-pocket cap.

✅ Track your drug spending to see how close you are to the $2,000 cap.

✅ Talk to your doctor or pharmacist about lower-cost alternatives.

Final Thoughts

The Medicare Part D donut hole has long been a concern for many beneficiaries, but 2025 brings positive changes. With the new $2,000 cap on out-of-pocket costs, managing your prescription expenses will become easier and more affordable.

Want help choosing the right Part D plan or understanding how these changes affect you? Lindbergh and Associates is here to help!

📞 Call us today or schedule a free consultation to get the most out of your Medicare prescription coverage.