Medicare Donut Hole Eliminated in 2025

THE MEDICARE DONUT HOLE — ELIMINATED IN 2025

Good news for Nevada Medicare beneficiaries: the Medicare Part D coverage gap — commonly known as the “Donut Hole” — was permanently eliminated starting January 1, 2025, under the Inflation Reduction Act. If you’ve been worrying about hitting the Donut Hole, you no longer need to.

This page explains what the Donut Hole was, what replaced it, and what the 2025 changes mean for your drug costs going forward.

WHAT WAS THE MEDICARE DONUT HOLE?

The Donut Hole was a coverage gap built into Medicare Part D from its creation in 2006. Once you and your plan spent a certain combined amount on covered drugs in a year, you temporarily lost most of your drug coverage and had to pay a higher percentage of costs out of pocket — until you spent enough to reach “Catastrophic Coverage.”

For years, the gap caused real financial hardship for seniors with high medication costs. Congress began phasing it out starting in 2011, and the Inflation Reduction Act of 2022 permanently eliminated it entirely, effective January 1, 2025.

HOW PART D COVERAGE WORKS NOW (2025 AND BEYOND)

Medicare Part D now has three straightforward phases — no gap in between:

1. Deductible Phase
You pay the network-discounted price for your medications until your deductible is met. In 2026, plans can charge up to $590 as a maximum deductible. Many plans waive the deductible on Tier 1 and Tier 2 drugs entirely.

2. Initial Coverage
After your deductible is met, you pay no more than 25% of the cost of your covered drugs. Your plan covers the rest.

3. Catastrophic Coverage
Once your total out-of-pocket drug costs reach $2,000 for the calendar year, you enter Catastrophic Coverage — and Medicare covers 100% of your covered drug costs for the rest of that year. This cap is new for 2025 and is one of the most significant improvements to Medicare in decades.

Example — how it works in 2026:
Mrs. Rivera takes three medications. Her plan has a $0 deductible on Tier 1–2 drugs and 25% coinsurance on Tier 3. As she fills her prescriptions throughout the year, her out-of-pocket costs accumulate. Once she reaches $2,000 total for the year, Medicare covers 100% of her remaining drug costs through December 31. No gap, no sudden cost increase — just straightforward coverage.

WHAT COUNTS TOWARD YOUR $2,000 OUT-OF-POCKET MAXIMUM

Counts toward your cap:
• Your annual deductible payments
• Your copays and coinsurance during Initial Coverage
• Manufacturer discounts on brand-name drugs

Does NOT count toward your cap:
• Your monthly Part D premium
• Pharmacy dispensing fees paid by your plan
• Costs for drugs not covered by your formulary

HOW TO LOWER YOUR PART D COSTS IN 2026

Even with the Donut Hole eliminated, smart plan selection still saves money:

• Choose generics when available — generics cost significantly less and count the same toward your $2,000 cap
• Use preferred mail-order pharmacies — many plans offer $0 or reduced copays for 90-day supplies by mail
• Use preferred pharmacies — in-network preferred pharmacies typically have lower copays than standard pharmacies
• Ask your doctor about therapeutic alternatives — a drug in the same class on a lower tier can mean lower copays
• Apply for Extra Help (Low Income Subsidy) — Nevada seniors who qualify can have their Part D premium, deductible, and copays significantly reduced or eliminated entirely. Contact Social Security at 1-800-772-1213, or call us at 702-840-1111 and we’ll check your eligibility for free
• Veterans — may qualify for reduced-cost medications through the VA hospital or local VA clinic

WHAT ABOUT MEDICARE ADVANTAGE PRESCRIPTION DRUG (MAPD) PLANS?

Medicare Advantage plans with built-in drug coverage (MAPD) follow the same 2025 Part D rules — including the $2,000 out-of-pocket cap and the elimination of the Donut Hole. Some MAPD plans offer $0 deductibles on Tier 1, 2, and 3 drugs, which can lower your costs further than a standalone Part D plan. Depending on your medications, an MAPD plan may be the most cost-effective option.

HOW NEVADA MEDICARE HELPS

With dozens of Part D plans available in each Nevada county — each with different formularies, premiums, and copay structures — choosing without help almost always means overpaying.

At Nevada Care™, we run a complete prescription drug analysis for every client at no charge. We enter your exact medications, compare every available plan in your zip code, and identify the plan with the lowest total annual cost and fewest restrictions — then enroll you. All for free.