Out With the “Donut Hole”

October is just around the corner, and countless ads about the Annual Open Enrollment are already flooding TV screens and social media feeds. During an election year, there are always concerns about changes, but some positive reports
are circulating.

Health advisors are encouraged and expect Medicare Advantage Plans to remain stable regarding medical and hospital coverage. At the same time, there may be scaling back on extras like over-the-counter benefits, fitness, dental, and vision.

The good news is that this is the last year for the “donut hole” due to the Inflation Reduction Act. In 2025, there will be a $2,000 a year out-of-pocket cap for Medicare-covered drugs. This cap includes standalone Medicare Part D policies and drug coverage in Medicare Advantage plans.

In the past, if you “fell” into the “hole,” you paid many out-of-pocket expenses for prescriptions. If you’re not familiar with this phrase, health plans with Medicare prescription drug coverage (Part D) had a coverage gap (called a “donut hole”). The gap happened when a drug plan imposed a limit on what they would cover for prescriptions.

In 2024, Medicare-eligible individuals entered the “donut hole” once they and their plan paid $5,030 towards prescription drugs. During this stage, they paid 25% of the cost of covered medications until they spent $8,000 out-of-pocket.

So, Americans are happy to bid the “donut hole” farewell!

Other 2025 changes allow Part D enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly installments instead of all at once at the pharmacy. These changes will apply to Medicare Part D plans — including standalone Medicare prescription drug plans and Advantage plans with prescription drug coverage. For additional details, read the full article on cms.gov.

If you are turning 65 or would like a Health Advisor to walk you through these changes, contact an advisor at Insurance Group of the Ozarks at (417) 725-1131. We look forward to serving you!