Health Reform and Medicare: Closing the Doughnut Hole

The Affordable Care Act, also known as health reform, closes the Part D doughnut hole—the gap in drug coverage during which people with Medicare must pay the full cost of their prescriptions out of pocket. Health reform phases out the doughnut hole by decreasing the beneficiary’s share of drug costs during the doughnut hole until it reaches 25 percent in 2020 for both brand-name and generic drugs. However, the phase-out works differently for brand-name and generic drugs. The charts below illustrate how much the beneficiary will pay during the doughnut hole for both brand name and generic drugs through 2020, when the phase-out will be complete.