Costs
Coverage Gap
Quick answer
The Coverage Gap was the middle phase of the old Part D benefit structure — historically called the donut hole. It has been replaced by a single annual out-of-pocket cap under the Inflation Reduction Act.
Plain-English definition
Today, Part D flows from deductible → initial coverage → out-of-pocket cap.
Why it matters
You may still see 'coverage gap' referenced in older plan documents.
A simple example
Under the current design, once you meet the annual cap, all covered drugs are $0.
Common mistakes & misconceptions
Related terms
Donut Hole
The 'donut hole' was a coverage gap in Part D drug plans where beneficiaries paid a higher share of drug costs after early-year spending. The Inflation Reduction Act effectively closed it starting in 2025 with a hard annual out-of-pocket cap.
Catastrophic Coverage
Catastrophic Coverage is the final phase of Part D. Once your out-of-pocket drug spending reaches the annual cap, you pay $0 for covered drugs for the rest of the calendar year.
Medicare Part D
Medicare Part D is prescription drug coverage sold by private insurance companies approved by Medicare. You get it either as a stand-alone drug plan (PDP) with Original Medicare or bundled inside most Medicare Advantage plans.
Frequently asked questions
Do I still fall into a gap?+
No — the modern Part D benefit has a hard out-of-pocket cap instead.
Sources & references
📚 Where this information comes from
- Medicare.gov — official U.S. government site for people with Medicare ↗Primary source for benefits, enrollment periods, and plan comparison.
- CMS.gov — Centers for Medicare & Medicaid Services ↗Federal rulemaking, program updates, and official guidance.
- Social Security Administration — Medicare enrollment & premiums ↗Enrollment, premium withholding, and IRMAA determinations.
When you're ready, compare plans on your own terms
See Medicare Advantage plans from the insurance companies we represent, or walk the course with a licensed agent whenever you'd like a second set of eyes.
We help compare Medicare Advantage plans from the insurance companies we represent, and we don't offer every plan available in your area.
Medicare Caddies is an independent insurance agency. We are not affiliated with, endorsed by, or connected to the U.S. government, the federal Medicare program, or the Centers for Medicare & Medicaid Services (CMS). We help compare Medicare Advantage plans from the insurance companies we represent, and we don't offer every plan available in your area.