What stage of coverage is commonly referred to as the "donut hole"?

The stage of coverage commonly referred to as the "donut hole" is the Coverage Gap. This term is used specifically in the context of Medicare Part D prescription drug plans. During the Coverage Gap, beneficiaries experience a temporary limit on what the drug plan will cover for prescription drugs. After reaching a certain out-of-pocket threshold, beneficiaries enter this phase where they must pay a higher portion of their drug costs until they reach the catastrophic coverage threshold.

Understanding this stage is crucial as it highlights the potential financial burden on beneficiaries when they exceed their initial coverage limit but haven't yet qualified for catastrophic coverage. It’s important to know that while individuals may be responsible for a greater percentage of their medication costs during this period, there are programs and discounts available to help mitigate expenses for those who find themselves in the Coverage Gap. This concept is a key part of the Medicare Part D design and significantly impacts the healthcare costs for many senior citizens and individuals with disabilities.