How to Manage Medication Costs During Medicare Part D Coverage Gaps (Donut Hole)

By the end of 2024, millions of Medicare beneficiaries will face a confusing and costly phase called the donut hole-a coverage gap where out-of-pocket drug costs spike after you and your plan have spent a certain amount on prescriptions. But here’s the good news: starting January 1, 2025, this gap will disappear entirely. For now, though, if you’re in the donut hole or close to it, you need to know how to protect your wallet.

What the Donut Hole Actually Means in 2024

The donut hole isn’t a loophole-it’s a phase in Medicare Part D coverage. Once you and your plan have spent $5,030 on covered drugs in 2024, you enter the coverage gap. You’re not out of coverage, but you pay more. For brand-name drugs, you pay 25% of the cost. For generics, you pay 25% too. Sounds fair, right? But here’s the catch: the 70% discount drug manufacturers give on brand-name meds doesn’t count toward your out-of-pocket spending. Only your 25% does. That means if you take expensive biologics like Humira or Repatha, you’re still paying hundreds or even over a thousand dollars a month out of pocket.

Meanwhile, if you’re on mostly generics, you’ll hit the catastrophic coverage threshold much later-around $6,000 in out-of-pocket spending. That’s because manufacturer discounts don’t apply to generics. So your path out of the donut hole is longer and more expensive.

Why the Donut Hole Is Vanishing in 2025

The Inflation Reduction Act of 2022 didn’t just tweak the system-it rewrote it. Starting January 1, 2025, there will be no more donut hole. Instead, there’s a hard cap: $2,000 per year in out-of-pocket drug costs. After you hit that, your Part D plan covers 100% of your prescription costs for the rest of the year. That’s a massive change. In 2024, many beneficiaries spent over $7,000 before hitting catastrophic coverage. In 2025, you’ll never pay more than $2,000.

Manufacturers will still offer discounts, but they’ll be structured differently. Instead of a 70% discount during the gap, they’ll pay 10% during initial coverage and 20% during catastrophic coverage. The government is stepping in to fill the rest. This simplifies everything. No more tracking discounts. No more confusion about what counts toward your limit.

Who Gets Hit Hardest Right Now?

If you’re taking one or two high-cost brand-name drugs-like those for rheumatoid arthritis, multiple sclerosis, or cancer-you’re in the danger zone. In 2022, about 19% of Medicare Part D enrollees reached the coverage gap. For those people, average annual savings from the 2025 cap will be nearly $1,000. That’s not a small number. It’s rent. It’s groceries. It’s skipping a dose to make the next month last.

Reddit threads and Medicare forums are full of stories. One user described paying $1,200 a month for Humira during the gap. Another split pills to stretch their supply. A third used Amgen’s patient assistance program to drop their Repatha cost from $560 to $5 a month. These aren’t rare cases. AARP’s 2023 survey found that 74% of people who entered the donut hole didn’t know about cost-saving tools until they were already in it.

Five Proven Ways to Lower Costs Before 2025

• Check your plan’s formulary tier. Not all drugs are created equal. Tier 3 or 4 drugs cost more. If your medication is on a higher tier, ask your doctor if there’s a similar drug on Tier 2. Even a small switch can save hundreds.
• Use manufacturer patient assistance programs. Most big drugmakers have them. Companies like AbbVie, Pfizer, and Amgen offer copay cards, free drug programs, or discounts. Apply early. You don’t need to be poor to qualify. Many programs accept anyone with Medicare Part D. One 2023 study showed these programs cut brand-name drug costs by 63% to 92%.
• Switch to generics when possible. If your doctor says it’s safe, switching from a brand-name statin to a generic atorvastatin can save you $1,200 to $2,500 a year. Same goes for metformin, lisinopril, or levothyroxine. Generic versions are just as effective.
• Get 90-day supplies. Mail-order pharmacies often charge less per pill. A 90-day supply might cost the same as two 30-day fills. That means fewer copays and fewer trips to the pharmacy. Medicare.gov confirms this can reduce your monthly costs by 15% to 25%.
• Apply for Extra Help (Low-Income Subsidy). If your income is below $22,590 (single) or $30,660 (couple) in 2024, you may qualify. Extra Help covers your deductible, lowers your copays, and eliminates the donut hole entirely. Over 12 million people got it in 2023. If you’re unsure, call 1-800-MEDICARE or visit Social Security’s website. It takes 10 minutes to apply.

Use the Medicare Plan Finder Before Next Year

Don’t wait until open enrollment to check your plan. Use the Medicare Plan Finder right now. Type in your exact medications, dosages, and pharmacy. Compare plans side by side. You might be shocked. One person in Brisbane switched from a $50/month plan with high copays to a $30/month plan with better drug coverage-and saved $1,200 a year. The National Council on Aging says people who optimize their plan save an average of $1,047 annually.

Look for plans that cover your drugs in lower tiers. Check if they have preferred pharmacies. See if they offer mail-order. Even small differences add up fast when you’re in the donut hole.

What to Do When You’re Already in the Gap

If you’re already paying 25% of high drug costs, don’t panic. Start with these steps:

1. Call your pharmacy. Ask if your drug has a manufacturer coupon or discount card. Many are hidden behind a website search.
2. Ask your doctor for a 90-day prescription. Fewer refills = fewer copays.
3. Check if your state has a Medicare Savings Program. Thirty-seven states offer extra help with premiums and out-of-pocket costs. You don’t need to be on Medicaid to qualify.
4. Don’t skip doses. Studies show 32% of people in the gap skip pills to save money. That leads to ER visits, hospitalizations, and higher long-term costs.
5. Set up a budget. Track every drug expense. Know how close you are to $8,000 in total spending. That’s when catastrophic coverage kicks in.

Prepare for 2025-Even If You’re Not in the Gap Yet

The changes in 2025 aren’t just about the donut hole disappearing. They’re about simplifying your entire drug coverage. Here’s what to do now:

• Read your Annual Notice of Change (ANC). Plans mailed these in September 2024. They tell you exactly how your premiums, copays, and coverage will change next year.
• Update your Medicare Plan Finder with your current meds. See which plans will be cheapest under the new $2,000 cap.
• Ask your pharmacist if your drugs will still be covered. Some plans will drop certain brand-name drugs or change tiers.
• Don’t assume your current plan is still the best. Premiums are projected to drop slightly in 2025, but coverage can shift.

The Bigger Picture: Why This Matters

The donut hole wasn’t just a financial burden-it was a health risk. When people couldn’t afford their meds, their conditions worsened. Hospital admissions for uncontrolled diabetes, heart failure, and high blood pressure went up. The Medicare Payment Advisory Commission estimates the $2,000 cap will reduce prescription abandonment by 18% to 22%. That could save the system $1.2 billion a year in avoided hospital care.

This isn’t just policy. It’s personal. It’s about a senior choosing between insulin and their electric bill. It’s about a veteran with arthritis skipping doses because they can’t afford the copay. The 2025 cap doesn’t fix everything-premiums, pharmacy networks, and formulary changes still matter. But it ends the worst part: the fear that your medication will suddenly become unaffordable.