Medicare Glossary

Catastrophic Coverage

The phase of Medicare Part D drug coverage that begins after you and your plan have spent a certain total amount on covered drugs in a year. In this phase, your copays are significantly reduced. In 2025, out-of-pocket costs are capped at $2,000 annually.

Coverage Gap

A phase in Medicare Part D where you pay a higher share of your drug costs after your total drug spending reaches a certain amount. Sometimes called the "donut hole." In 2025, the coverage gap was effectively eliminated for most beneficiaries due to the Inflation Reduction Act.

Also known as: Donut Hole