what is doughnut hole?

Source: Centers for Medicare & Medicaid Services

Doughnut hole -- a gap in coverage that is a feature of many of the plans providing prescription coverage under Medicare.

In other words, it is a coverage gap when the plan makes no contribution to drug costs and you must pay for the drugs out of your pocket until you reach a pre-set amount. The pre-set amount varies according to the plan. The Medicare coverage kicks in again after an annual spending limit is reached.

Doughnut hole is a phrase for the step in a Medicare Part D plan in which you pay almost all of your expenses for eligible drugs, until an annual spending limit is reached, and then the Medicare coverage kicks in again.

Doughnut hole refers to a feature of the current drug program that requires many beneficiaries to pay the true cost of prescriptions after initial coverage is exhausted.