Doughnut Hole

The "Doughnut Hole" refers to a gap in insurance coverage, particularly in Medicare Part D, which is the prescription drug benefit for seniors. After spending a certain amount on medications, beneficiaries enter the doughnut hole where they must pay a higher percentage of their drug costs out of pocket, up to a specified limit. Once they reach this limit, they exit the doughnut hole and receive catastrophic coverage, where insurance pays most of their drug costs. This term illustrates the financial risk some face in affording medications within this coverage gap.