The donut hole — is it gone?

What was the donut hole?

The donut hole was a phase of Part D coverage where, after you and your plan had spent a certain amount on drugs, you were responsible for a larger share of costs — sometimes up to 25% of the price of both brand-name and generic drugs. This phase fell between the initial coverage phase and catastrophic coverage, creating a "gap" in full coverage.

For many beneficiaries, this gap meant hundreds or thousands of dollars in unexpected costs during the middle of the year.

What replaced it?

The Inflation Reduction Act simplified Part D into three straightforward phases:

Phase	What happens	What you pay
1. Deductible	You pay full cost until deductible is met	100% of drug costs
2. Initial coverage	You and your plan share costs	Copays or ~25% coinsurance
3. Catastrophic	You've reached the $2,100 cap	$0 for covered drugs

There is no longer a fourth phase where your costs spike. Once you hit $2,100 in out-of-pocket spending, you're done paying for the year.

Timeline of the donut hole closing

The donut hole was gradually closed over more than a decade through a combination of the Affordable Care Act (2010) and the Inflation Reduction Act (2022):

• 2010 — Beneficiaries in the donut hole received a $250 rebate
• 2011–2019 — Brand-name and generic discounts in the gap gradually increased
• 2020 — The gap was "closed" to 25% coinsurance (but the phase still existed)
• 2025 — The Inflation Reduction Act eliminated the coverage gap entirely and introduced the $2,000 out-of-pocket cap
• 2026 — The cap increased to $2,100