Starting January 1, 2025, the Medicare Part D donut hole is gone. That’s not a rumor-it’s law. The Inflation Reduction Act finally ends the coverage gap that forced millions of seniors to choose between paying for insulin or groceries. But if you’re still in the gap in 2024, or you’re preparing for 2025, you need to know how to protect yourself now-and how the new rules will change everything next year.
What the Donut Hole Actually Means in 2024
The donut hole isn’t a hole you fall into randomly. It’s a phase in your Medicare Part D drug plan that kicks in after you and your plan have spent $5,030 on covered drugs in 2024. At that point, you’re no longer getting the full help from your plan. You start paying 25% of the cost for both brand-name and generic drugs. Sounds manageable? It’s not. Here’s the catch: that 25% is only part of the story. For brand-name drugs, the manufacturer gives you a 70% discount, but that discount doesn’t count toward your out-of-pocket spending limit. Only what you actually pay out of your pocket counts. So if your Humira costs $1,200 a month, you pay $300, and the manufacturer covers $840. But only the $300 counts toward getting you out of the gap. That means you’re stuck paying hundreds every month for months on end, even though the drug is technically discounted. For generics, there’s no manufacturer discount. You pay 25% of the full price, and that’s it. No help from the drug company. So if your generic metformin costs $40 a month, you pay $10. That adds up fast when you’re on multiple meds.Why the Donut Hole Hits Some People Harder Than Others
Not everyone feels the donut hole the same way. If you take mostly brand-name drugs-like Humira, Repatha, or Enbrel-you’ll hit the catastrophic coverage phase faster. Why? Because the 70% manufacturer discount counts toward your total drug spending, even though you don’t get to keep it. So even though you’re paying $300 a month for Humira, the $840 discount pushes your total drug spending up faster. That means you might reach the $8,000 threshold (where catastrophic coverage kicks in) after spending only $3,300 out of pocket. But if you’re on generics-like lisinopril, atorvastatin, or levothyroxine-you’re stuck. No manufacturer help. You pay 25% of the full price, and that’s all that counts. You could spend $6,000 out of pocket before you get out of the gap. That’s a lot of money for someone on a fixed income. A 2023 survey by the Medicare Rights Center found that 68% of people who entered the donut hole had to change how they took their meds. Some skipped doses. Some split pills. Some stopped filling prescriptions entirely. That’s not just inconvenient-it’s dangerous.How to Save Money Before the Donut Hole Hits
You don’t have to wait until you’re in the gap to act. Here’s what works right now:- Check your plan’s formulary. Not all drugs are created equal. Your plan might list your medication in Tier 3 (higher cost) instead of Tier 2. Ask your pharmacist or log into your plan’s website. If a cheaper alternative exists and your doctor agrees, switch. A switch from brand to generic can save you $1,200 to $2,500 a year.
- Use 90-day mail-order prescriptions. Most Part D plans charge less for a 90-day supply than three separate 30-day fills. You might save 15-25% per prescription. That’s $20-$50 a month on a $200 drug.
- Use the Medicare Plan Finder. This tool lets you enter your exact medications and see which plans cost the least. In 2023, people who switched plans based on their drugs saved an average of $1,047 a year. Don’t assume your current plan is still the best.
- Apply for Extra Help. If your income is below $21,870 (single) or $29,580 (married), you qualify for the Low-Income Subsidy. It covers your premiums, deductibles, and eliminates the donut hole entirely. About 12.6 million people qualified in 2023-many didn’t even know it.
Manufacturer Assistance Programs Are Your Secret Weapon
Big drug companies have patient assistance programs-and they’re not hard to get. If you’re on a brand-name drug like Humira, Enbrel, or Repatha, the manufacturer likely offers a copay card or free drug program. One woman on Reddit, u/SeniorCareAdvocate, shared how her Repatha cost $560 a month until she enrolled in Amgen’s program. It dropped to $5. That’s not a fluke. A 2023 study in the Journal of Managed Care & Specialty Pharmacy found these programs cut out-of-pocket costs by 63% to 92% for brand-name drugs. How to find them:- Search “[Drug Name] patient assistance program”
- Visit NeedyMeds.org or RxAssist.org-both are free, nonprofit databases
- Ask your pharmacist. They often have printed brochures or direct links
What Changes in 2025 (And How to Prepare)
On January 1, 2025, the donut hole disappears. Instead of four phases, Medicare Part D will have three:- Deductible phase (up to $590)
- Initial coverage phase (until you’ve paid $2,000 out of pocket)
- Catastrophic coverage (you pay $0 for covered drugs)
What to Do Before December 31, 2024
You still have time to act. Here’s your checklist:- Review your Annual Notice of Change. Your plan mailed this in September 2024. It tells you how your costs, coverage, and formulary are changing for 2025. Compare it to last year’s.
- Call your pharmacy. Ask if your drugs are changing tiers or prices in 2025. Some plans will shift drugs to higher tiers to offset the $2,000 cap.
- Reapply for Extra Help. Even if you got it last year, you must reapply every year. Don’t assume you’re still covered.
- Use the Medicare Plan Finder again. New plans are launching in 2025. The cheapest plan last year might not be the cheapest next year.
Real Stories: What Happens When You Don’t Act
One man in Ohio, 72, took two brand-name drugs for rheumatoid arthritis. In 2023, he hit the donut hole in May. By October, he’d spent $4,200 out of pocket. He skipped doses. His pain got worse. He ended up in the ER with a flare-up. His hospital bill: $8,700. He could’ve avoided it all with a generic switch and a manufacturer program. A woman in Florida, 68, took a generic blood pressure med. She didn’t realize the donut hole didn’t help her. She paid $120 a month for 8 months straight. By December, she’d paid $960-and still wasn’t out of the gap. She didn’t know about mail-order or Extra Help until a community health worker visited her home. These aren’t rare cases. They’re the norm.What’s Next After 2025
The $2,000 cap is a big win, but it’s not the end. Experts predict more changes: lower premiums, expanded Extra Help, and possibly even price negotiation for top-cost drugs. For now, focus on what you can control:- Know your drugs
- Know your plan
- Know your options
Is the donut hole still active in 2025?
No. The Medicare Part D coverage gap, or donut hole, was eliminated effective January 1, 2025. Instead of a gap, there’s now a $2,000 annual out-of-pocket spending cap on prescription drugs. Once you hit that cap, you pay $0 for covered medications for the rest of the year.
How much do I pay during the coverage gap in 2024?
In 2024, once you and your plan have spent $5,030 on covered drugs, you enter the coverage gap. You pay 25% of the cost for both brand-name and generic drugs. For brand-name drugs, the manufacturer provides a 70% discount, but only your 25% payment counts toward getting you out of the gap. For generics, there’s no manufacturer discount-you pay 25% of the full price.
Can I avoid the donut hole by switching plans?
Yes. Not all Medicare Part D plans have the same cost structure. Some have lower deductibles, better formularies, or lower copays for your specific drugs. Using the Medicare Plan Finder tool and comparing plans based on your exact medications can help you avoid or delay entering the coverage gap. People who optimize their plan selection save an average of $1,047 a year.
What if I can’t afford my meds even with the $2,000 cap?
If you’re still struggling, you may qualify for Extra Help (Low-Income Subsidy). This federal program reduces or eliminates premiums, deductibles, and copays. In 2023, over 12.6 million people qualified. You can apply through Social Security or your state Medicaid office. Even if you think your income is too high, check-it’s not as strict as people think.
Do manufacturer discounts still help after 2025?
Yes, but differently. After 2025, manufacturer discounts no longer count toward your $2,000 out-of-pocket cap. However, you still get the discount at the pharmacy counter-meaning you pay less upfront. For example, if your brand-name drug costs $1,000 and the manufacturer gives a 70% discount, you pay $300, not $1,000. That $300 counts toward your $2,000 limit. The discount still helps, but it doesn’t speed up your exit from the initial coverage phase like it used to.
Are generic drugs always cheaper than brand-name drugs in Medicare Part D?
Usually, yes-but not always. Some brand-name drugs have high manufacturer discounts that make them cheaper than their generic equivalents in certain plans. Always compare the final out-of-pocket cost using the Medicare Plan Finder. For example, a brand-name drug with a 70% discount might cost you $10, while a generic without discounts could cost $25. Don’t assume generics are always cheaper-check your plan’s pricing.
Joy F
January 1, 2026 at 16:54The donut hole was always a scam dressed up as policy. They let you think you’re getting help, but the math was rigged-manufacturer discounts don’t count toward your out-of-pocket? That’s not a discount, that’s a psychological trick. They’re giving you the illusion of relief while keeping you trapped in the same cage. And now they’re changing the rules again? Of course they are. The system doesn’t want you free-it wants you compliant.