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

The "donut hole" refers to Stage 3 of drug coverage within Medicare Part D, also known as the coverage gap. This is the stage where beneficiaries face a temporary limit on what the drug plan will pay for covered prescription medications. Specifically, once a beneficiary and their drug plan have spent a certain amount on covered drugs, they enter this gap where they may have to pay a larger share of their medication costs until they reach the next stage of coverage.

During this period, while beneficiaries initially pay a smaller percentage of their drug costs, their expenses increase significantly as they are responsible for a higher out-of-pocket cost. The donut hole is a critical concept within Medicare as it highlights the challenges beneficiaries may encounter regarding affordability and access to necessary medications. Understanding this stage helps beneficiaries to better plan their healthcare expenses and navigate their choices effectively.