Medicare Part D Coverage Gap (Donut Hole) Calculator

About this Medicare Part D coverage gap calculator

This calculator is designed to help you estimate how your prescription drug spending may flow through the different phases of a standard Medicare Part D plan: deductible, initial coverage, coverage gap (also called the donut hole), and catastrophic coverage. By entering a few yearly cost estimates, you can see roughly when you might enter the coverage gap and when catastrophic coverage could begin.

The numbers you see are educational estimates only. Actual costs vary by plan, pharmacy, and the specific medications you take. Always review your plan documents and consult Medicare or a licensed professional before making coverage decisions.

Key inputs this calculator uses

The tool relies on simplified yearly amounts that most people can estimate from current prescriptions and plan documents:

• Estimated yearly retail cost of covered drugs: The total annual price of your Part D covered prescriptions at the pharmacy, before the plan pays its share. This is sometimes called the “full cost” or “negotiated retail price.”
• Plan deductible (if any): The amount you must pay out of pocket for covered drugs before your plan begins its normal cost sharing. Some plans have a low or $0 deductible; others use the standard Part D deductible.
• Typical coinsurance or copay percentage in initial coverage: The share you normally pay after meeting the deductible and before entering the coverage gap (for example, 25% of the drug’s cost).

The calculator combines these inputs with standard Part D threshold amounts (for the current year) to estimate how much of your drug spending falls into each coverage phase.

How Medicare Part D coverage phases work

Most Part D plans follow the same general structure, even though specific dollar amounts can differ from plan to plan. There are four main phases:

1. Deductible phase

   You pay 100% of covered drug costs until you meet your plan’s deductible (if your plan has one). Only what you pay in this phase counts toward meeting the deductible, but the full drug cost also counts toward moving into later phases.

2. Initial coverage phase

   After you meet the deductible, you move into initial coverage. During this phase, you typically pay a fixed copay or a percentage (coinsurance) of the drug cost. Your plan pays the rest. You stay in this phase until your total drug costs (what you and the plan pay together) reach the initial coverage limit set for the year.

3. Coverage gap (donut hole)

   Once total drug costs exceed the initial coverage limit, you enter the coverage gap. In today’s Part D design, you usually pay a standardized percentage of the drug price for both brand-name and generic drugs while you are in this phase. Manufacturer discounts and what you pay at the pharmacy both count toward the out-of-pocket threshold that leads to catastrophic coverage.

4. Catastrophic coverage phase

   After your true out-of-pocket costs reach the catastrophic threshold for the year, you enter catastrophic coverage. In this phase, you pay much lower copays or coinsurance for covered drugs for the rest of the calendar year.

Formulas used in this calculator

The calculator uses simplified formulas based on standard yearly Part D parameters (deductible, initial coverage limit, and catastrophic threshold). Exact values change each year and may differ for specific plans, but the structure is similar.

Let the following represent key amounts:

Very broadly, estimated costs in each phase can be expressed as:

• Deductible out-of-pocket: the smaller of your deductible and total retail cost: OOPded = min(R, D).
• Initial coverage out-of-pocket: your share of remaining costs until total drug spending reaches the initial coverage limit.
• Coverage gap out-of-pocket: your share of drug costs in the gap until your true out-of-pocket reaches T.
• Catastrophic out-of-pocket: a much lower share of costs for any remaining drug spending after you pass the catastrophic threshold.

The calculator applies current-year percentages for each phase to estimate your total out-of-pocket spending and the point at which you might enter the coverage gap and catastrophic coverage.

How to interpret your results

After you enter your estimated yearly retail drug costs, plan deductible, and typical coinsurance or copays, the calculator will show you:

• Estimated out-of-pocket costs in each phase: An approximate breakdown of what you might pay in the deductible, initial coverage, coverage gap, and catastrophic phases.
• Whether you are likely to enter the coverage gap: If your expected total drug costs are below the initial coverage limit, you may not reach the donut hole at all.
• Whether you may reach catastrophic coverage: If your projected out-of-pocket spending exceeds the catastrophic threshold, the results will show an estimate of when this could happen.
• Total estimated annual out-of-pocket: A combined estimate across all phases, which you can compare with other plans or scenarios.

Use these estimates as a guide to understand how sensitive your costs may be to changes in drug prices, plan deductibles, or coinsurance. For example, if most of your spending occurs before the coverage gap, a plan with a lower deductible might matter more. If you clearly enter the gap and approach catastrophic coverage, you may want to look closely at plan rules for high-cost drugs.

Worked example

Imagine a person with the following situation (numbers are illustrative only):

• Estimated yearly retail cost of covered drugs: $6,000
• Plan deductible: $545
• Typical coinsurance in initial coverage: 25%

In this scenario:

1. The first $545 of drug costs fall into the deductible phase, and the person pays 100% of that amount.
2. After the deductible, the person pays about 25% of each drug cost in the initial coverage phase, while the plan pays the remaining 75%, until total drug spending reaches the initial coverage limit for the year.
3. Once the initial coverage limit is passed, the person enters the coverage gap, where they pay a standardized share of drug costs. Manufacturer discounts on brand-name drugs also help move them toward the catastrophic threshold.
4. If their true out-of-pocket costs reach the catastrophic threshold before year-end, they move into catastrophic coverage and pay much smaller copays or coinsurance for the remainder of the year.

The calculator automates this type of breakdown based on your own estimates, using the standard Part D thresholds for the current year.

Coverage phase comparison

Assumptions and limitations

• Standardized structure: The calculator assumes a standard Medicare Part D benefit design. Some plans may use different deductibles, tiered copays, or special rules that affect your actual costs.
• Current-year thresholds: Estimates are based on standard Part D parameters for the current plan year. Medicare updates deductibles, initial coverage limits, and catastrophic thresholds annually, so estimates may differ in future years.
• No Extra Help/Low-Income Subsidy: The tool does not model Extra Help (LIS), State Pharmaceutical Assistance Programs, or other subsidies that can greatly reduce out-of-pocket costs.
• Simplified drug mix: The calculator treats your drug spending as an average across the year. In reality, prescriptions may start or stop midyear, or switch between generic and brand-name versions.
• Plan-specific rules: Prior authorization, quantity limits, step therapy, and preferred pharmacy networks can all affect what you actually pay. These are not captured in the estimates.
• Educational use only: Results are not a guarantee of coverage or cost. Always verify details with your plan, Medicare, or a licensed insurance professional.

Regulatory notices and non-affiliation statement

Medicare is a federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). This calculator is an independent educational tool and is not sponsored, endorsed, or approved by the U.S. government, CMS, Social Security Administration, or any Medicare program.

The information provided here is general in nature and may not reflect your specific plan. For official information about Medicare Part D, visit the government's website at Medicare.gov or speak with a licensed agent or counselor who can review your individual situation.

Because Medicare rules and cost thresholds change over time, review the "current as of" year or update notes for this calculator and confirm that any estimates you rely on are based on the most recent data available.