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Know Your Plan: Getting Into and Out of the Coverage Gap

Will the Coverage Gap affect me?

How do I get in and out of the Coverage Gap?

Know your Gap Status: Track Your Spending

In a standard Medicare drug plan in 2008, you entered the coverage gap when the total amount you spent on covered drugs by you and your plan combined reaches $2,510, not including your monthly premiums. Only covered drugs count toward getting you into—and out of—the coverage gap.

Once you enter the coverage gap, you must pay 100% of your prescription drug costs until the total amount you have paid reaches the "out-of-pocket threshold." The out-of-pocket limit is a dollar amount that marks the end of the coverage gap. In 2008, the out-of-pocket threshold for most plans that have a coverage gap is $4,050.

Once you reach the out-of-pocket limit you pay 5% of your covered drug costs (or a small copayment) until the end of the calendar year. Your plan pays the rest. This is called "catastrophic" coverage because it protects you if your total drug costs are very high.

Only certain kinds of expenses count toward the out-of-pocket threshold: Expenses that count toward the out-of-pocket limit include what you spend on covered drugs (including your deductible, copayments, coinsurance, and all payments you make for covered drugs through the coverage gap).

Expenses that do not count toward the out-of-pocket threshold include your monthly premium payments, payments for drugs that are not covered drugs, payments for drugs purchased from other countries such as Canada, and costs paid by certain assistance programs.