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Medicare Advantage plans are subject to the Donut Hole
What is the Donut Hole?
The Medicare drug plans have different payments stages. The "donut hole" refers to a partial gap in prescription drug cost coverage under Medicare Part D or Medicare Advantage Plans.
The standard benefit in 2016 has a $360 deductible and 25% coinsurance up to an initial coverage limit of $3,310 in total drug costs, followed by a coverage gap. During the gap you'll pay no more than 45% of the price for the brand-name drugs and you’ll pay 58% of generic drugs. Once you've spent $4,850 out-of-pocket in 2016, you're out of the coverage gap and go into the catastrophic level of coverage. Catastrophic coverage is when you will pay 5 percent of the cost of each drug, or $2.95 for generics and $7.40 for brand-name drugs (whichever is greater).
Medicare Prescription Drug Plan (Part D)
These plans (sometimes called "PDPs") add drug coverage to Original Medicare. These are private drug plans that contract with Medicare to provide drug coverage. These plans have premiums, some have deductibles, they have copays, and are subject to the donut hole. Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.