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What Are the 4 Phases of Part D Coverage?

Published by Robert J Stillwell on December 11, 2019

Learn more about the Medicare Part D coverage phases below.

Deductible Stage

There are some plans that have no deductible but many prescription drug plans do have a deductible included.  For some the deductible may only be on tiers 3, 4, and 5. 

For others, it may be on all tiers of their plan.  For example, if your plan has a deductible on tier 3, 4, 5 you pay your copayment on tier 1 and tier 2 drugs and the cost of the prescription of tier 3, 4, 5 drugs up to the deductible amount.

Initial Coverage Stage

Once you reach the deductible amount, you pay a copayment or coinsurance in the initial coverage stage. Most people will remain in this stage once you reach your deductible.  You pay a copayment or coinsurance based on the tier of your drugs which is designated by your insurance plan.  You remain here until your total drug costs reach $4,020.

Coverage Gap or “Donut Hole” Stage

Once you satisfy $4,020, you enter the coverage gap or “donut hole.”

You will pay no more than 25% coinsurance for generic drugs or brand name drugs for any tier during the coverage gap.    You remain in the donut hole or coverage gap until your total out of pocket costs exceed $6,350.

Catastrophic Coverage Stage

Once your yearly out-of-pocket costs reach $6,350, you move to the catastrophic coverage stage. For those that reach the catastrophic stage, you will pay whichever is greater 5% coinsurance or $3.60 on generics and $8.95 on brands.

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