Medicare
Donut Hole (Part D Coverage Gap)
The Part D coverage gap (donut hole) was effectively closed by the Inflation Reduction Act, which capped out-of-pocket drug costs at $2,100 starting in 2025.
Last reviewed: May 2026 · Editorial methodology
Definition
The Part D coverage gap, colloquially called the 'donut hole,' was a temporary period in the Medicare prescription drug benefit where beneficiaries paid a larger share of their drug costs after their plan's initial coverage limit was exhausted but before reaching the catastrophic coverage threshold. The gap was created by the original 2003 Part D legislation and subjected many beneficiaries — particularly those with high drug costs — to paying 25–100% of drug costs during a middle phase of coverage. The ACA began closing the donut hole incrementally starting in 2010, and the Inflation Reduction Act completed its elimination: beginning in 2025, beneficiaries pay no more than 25% cost-sharing during the coverage gap phase, and once total out-of-pocket spending reaches $2,100 in 2026, cost-sharing drops to $0 for the remainder of the year — effectively eliminating the financial shock the donut hole once caused. The $2,100 OOP cap is indexed to grow at 35% of Part D per capita spending growth in future years. Extra Help enrollees receive even lower cost-sharing throughout the year.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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