Yes.  If you use a great number of medications or one or more expensive medications, you can spend your way into, and out of the Coverage Gap or Donut Hole rather quickly.

Review: When do you enter and exit the Donut Hole?

When the retail value of your drug purchases exceeds your Initial Coverage Limit (ICL or Donut Hole entry point), you will leave your Medicare drug plan's Initial Coverage Phase and enter the Coverage Gap or Donut Hole.  So your drug's retail price, not what you actually spend will determine when (or if) you enter the Donut Hole.  The Initial Coverage Limit changes every year, so when you enter the Donut Hole will also change slightly every year - in 2023, you enter the Coverage Gap when your retail formulary drug costs exceed $4,660 ($5,030 in 2024).

Remember that your monthly premiums are not counted toward the Donut Hole. Also, the cost of non-formulary medications, over the counter medications, or medications purchased outside of the country do not count for going into, or out of, the Donut Hole.

When your total out-of-pocket drug spending exceeds the Medicare plan's total out-of-pocket spending threshold (TrOOP), you enter the Catastrophic Coverage Phase of your Medicare Part D plan.  The TrOOP limit can change every year and in 2023, you exit the Coverage Gap when your out-of-pocket spending exceeds $7,400 ($8,000 in 2024).  Medicare converts this out-of-pocket spending (TrOOP) to an estimated retail drug cost by using historical drug purchase data and so in 2023 you will exit the Donut Hole when you purchase formulary medications worth around $11,206 ($13,172 in 2024).

This means if you purchase a medication with a retail cost of over $4,660, you enter the 2023 Donut Hole and if you purchase a medication with a retail cost over $11,206, you will exit the 2023 Donut Hole.

Example: A single purchase of Revlimid® in January - directly into Catastrophic Coverage

Since a person enters the Donut Hole or Coverage Gap portion of their Medicare Part D plan based on the retail costs of their prescription medication purchases and a single medication such Revlimid® will cause you to go into – and out of the Donut Hole - and into the Catastrophic Coverage Phase – in one single purchase since the estimated retail cost of Revlimid is around $25,000 to $28,000 (for an estimate of the current retail price see our Q1Rx Drug Finder: Q1Rx.com/CA/59572041028).

Example: A single purchase of Forteo® in February - into Catastrophic Coverage by April

As another example, a medication such as Forteo® can have a retail cost of around $3,700 per month (as compared to around $874 in 2009). So if your only medication is Forteo, you would have entered the Donut Hole in early February and would exit the Donut Hole in April. (for an estimate of the current retail price of Forteo see our Q1Rx Drug Finder: Q1Rx.com/CA/00002840001)

Question:  How can the coverage of my formulary medication vary between Medicare Part D prescription drug plans?

In 2009, Forteo -- when Forteo was less expensive -- it was covered as a Tier 2, 3, 4, 5, or 6 drug - depending on your Medicare Part D plan.  Now in 2023, it is covered as a Tier 5 Specialty drug on most plans.  Even so, the cost-sharing (what you pay) before entering the Donut Hole can vary between Medicare Part D plans. But you get a 75% retail discount while in the Donut Hole and pay only about 5% of retail drug costs in Catastrophic Coverage.

Keep in mind that 2023 is the last year that Medicare Part D beneficiaries will pay cost-sharing in the Catastrophic Coverage phase.  For plan year 2024, the Inflation Reduction Act (IRA) of 2022 eliminates beneficiary cost-sharing in the Catastrophic Coverage phase.

The chart below shows how many older 2009 Medicare Part D plans have classified the drug Forteo on a particular tier and the range of cost-sharing back when the retail price of the medication was around $874.

The cost-sharing is used to calculate what you pay during the Initial Coverage Phase.  But, you will enter the Donut Hole at about the same time for all Medicare Part D plans since entering the Donut Hole is calculated based on the plans negotiated retail price for the medication. (this example is for plans in Pennsylvania).


And as you can see above, the 2009 Initial Coverage Phase organization and handling of Forteo varied significantly by plan, now, it is more consistent.