The donut hole is a phenomenon associated with Medicare Part D, the prescription drug portion of Medicare. Although Medicare Part D helps many senior citizens afford their prescription medications, the donut hole refers to a gap in coverage.
With Medicare Part D, you sign up for a plan in which you pay out-of-pocket premiums for your prescription medications until you reach your deductible. Then, your Part D benefit kicks in. However, once you spend a certain amount – $2,800 as of 2010 – your Part D coverage ends, and you have entered the donut hole. You stay in the donut hole until you spend a certain amount – $4,500 as of 2010.
Some Medicare Part D plans offer coverage for folks who enter the donut hole. If you opt for that, prepare to pay a higher monthly premium, points out the HealthCare.gov website. In an additional measure to help people who enter the donut hole, the government passed the Affordable Care Act, which provides Part D recipients in 2010 with a $250 rebate check.
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The Affordable Care Act will give people who enter the donut hole in 2011 a 50 percent discount on brand name prescription drugs. The donut hole is scheduled to end by 2020.