Healthcare reform is officially taking away donut holes.  But don’t worry, the beloved breakfast treat isn’t going anywhere.  What will be on its way out in the next six years is the infamous gap in Medicare Part D prescription drug coverage known as the Medicare donut hole.

This gap has been around since Medicare Part D’s formation in 2006.  In 2014, the hole refers to the gap in coverage that begins when someone enrolled in Medicare Part D reaches $2,970 in prescription costs. In past years, once that limit was hit, 100 percent of all prescription costs were up to you until you reached $4,750.  Because of the implementation of the Affordable Care Act (ACA) in 2014 however, the hole is diminishing. As a result of changes found in the ACA, once you hit $2,970 in prescription costs in 2014, 50 percent of medications covered by Part D will be paid for. Once you reach $4,750, you are eligible for catastrophic coverage in Medicare’s eyes, and 95 percent of additional drug costs will be covered by insurance. 

For Medicare patients in the donut hole, 2014 looked a lot different than even a year before. And with the ACA, the donut hole is supposed to keep shrinking until it closes all together.  

Once the hole closes entirely, you will have to pay 25 percent of Part D prescription costs at all times.  According to a senior Obama administration official quoted in Politico’s Playbook, the ACA  helped more than 7.3 million seniors and people with disabilities who reached the donut hole in their Medicare Part D plans save $8.9 billion on their prescription drug costs nationwide — or an average of $1,209 in savings per person.  That’s a lot of money, and for Medicare patients, it may sound too good to be true. 

The good news is, the donut hole will close, without a doubt.  What’s uncertain, however, is whether or not that will affect Medicare beneficiaries in other ways.  Because Part D plans will have to spend more money covering individuals, there’s a chance Part D premiums could increase for some on Medicare.  Those who are eligible for both Medicare and Medicaid, and were less affected by the donut hole to begin with, will continue to receive substantial coverage with few changes. On the other hand, hire – income retirees will most likely see an increase in monthly premiums but receive coverage in the gap.

Though the specifics are still being determined, the donut hole will be a thing of the past.  So expect to see even more changes in 2015.  In all of these changes, the best news may just be that the term "donut hole” can simply go back to meaning a delicious, sweet breakfast treat.