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Medigap Insurance Medicare Doughnut Hole

Doughnut Hole is a gap in medical coverage of prescription drugs which is normally available under Medicare Part D. It refers to the phase when your prescription drug costs are not reimbursed by your health care plan and you have to pay 100% of the cost out-of-pocket. Officially this phase is known as "Coverage Gap", but in everyday speech it is referred to as Doughnut Hole. This gap is intended to cover the insurance company's investments in the period between the initial coverage limit and the catastrophic threshold. The reimbursement for your prescription drug expenses is divided into three phases. In the first phase the amount of reimbursement reaches 75%. Then the second phase follows. As soon as policyholders consume drugs up to the threshold limit, which varies every year but is usually a bit above $2,500, they find themselves in the "Doughnut Hole". In the third phase, after you foot the entire bill up to $3,216 of the prescription drugs, the insurance company reimburses 95% of your costs.

It is important that Medigap policies no longer can supplement Medicare Part D and will not provide prescription drug coverage if you are enrolled in Medicare Part D. The alternative option is this case is Medicare Advantage Prescription Drug Plan which at least offers coverage for generic drugs.