Example: January Drug Costs

Month	Monthly Drug Cost	You Pay	Medicare Pays
January	$275	$275	$0	$275 deductible

At the end of January, you go to the doctor for your annual checkup. She tells you that your cholesterol has gone up, so you’ll have to start taking medication. Your drugs will now cost a total of $447 a month. Since you’ve already paid your deductible, Medicare now pays 75% of your Total Drug Cost ($335.25 a month) while you have to pay for 25% ($111.75 a month). The doctor says to take the medication for 5 months and to come in for another checkup at the end of June:

Example: January-June Drug Costs

Month	Total Drug Costs	You Pay	Medicare Pays
January	$275	$275	$0	$275 deductible
February	$447	$111.75	$335.25	Medicare pays 75% of your drug costs until your total drug costs reach $2,510
March	$447	$111.75	$335.25
April	$447	$111.75	$335.25
May	$447	$111.75	$335.25
June	$447	$111.75	$335.25
Totals	$2,510 Total Drug Costs	$833.75 Paid Out of Pocket

When you return to the doctor at the end of June, she tells you that, in addition to your high cholesterol, you have developed a heart condition that will require more medication. This will increase your Total Drug Costs to $1,608.12 a month. Since you already have reached the $2,510 limit, you have reached the donut hole and you’ll be paying the full costs of your drugs out of pocket until your Total Drug Costs reach $5,726.25.

Example: January-August Drug Costs

Month	Total Drug Costs	You Pay	Medicare Pays
January	$275	$275	$0	$275 deductible
February	$447	$111.75	$332.25	Medicare pays 75% of your drug costs until your total drug costs reach $2,510
March	$447	$111.75	$332.25
April	$447	$111.75	$332.25
May	$447	$111.75	$332.25
June	$447	$111.75	$332.25
July	$1,608.12	$1,608.12	$0	Medicare does not pay again until your total drug costs reach $5,726.25
August	$1,608.13	$1,608.13	$0
Totals	$5,726.25 in Total Drug Costs	$4,050 out of your pocket

When you go back to see your doctor at the end of August, she tells you that the medication is doing its job, but that she needs to prescribe a slightly higher dosage each month. Your drug costs will go up to $1,700 a month. Now that your total drug costs have reached $5,726.25, Medicare is going to pay for 95% of your costs:

Example: January-November Drug Costs

Month	Total Drug Costs	You Pay	Medicare Pays
January	$275	$275	$0	$275 Deductible
February	$447	$111.75	$332.25	Medicare pays 75% of your drug costs until your total drug costs reach $2,510
March	$447	$111.75	$332.25
April	$447	$111.75	$332.25
May	$447	$111.75	$332.25
June	$447	$111.75	$332.25
July	$1,608.12	$1,608.12	$0	Medicare does not pay again until your total drug costs reach $5,726.25
August	$1,608.13	$1,608.13	$0
September	$1,700	$85	$1,615	After your total drug costs exceed $5,726.25, Medicare pays 95% of the remaining costs
October	$1,700	$85	$1,615
November	$1,700	$85	$1,615
Totals	$10,826.25 in Total Drug Costs	$4,304.75 out of your pocket