Mr.Smalley is a retiree on the Medicare prescription drug plan. This year his drug expenditures are $15,100. What percentage will Medicare pay of the medications that cost between $8,000 and $15,100?

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Medicare Part D has a coverage gap, also known as the "donut hole," which starts after the total drug costs reach a certain limit ($4,020 in 2020) and ends when the out-of-pocket expenses exceed another threshold ($6,350 in 2020). During the coverage gap, the beneficiary pays a higher percentage of the drug cost, while Medicare pays a lower percentage until the out-of-pocket threshold is reached. In 2020, Medicare pays 95% of the generic drug cost in the coverage gap. Therefore, Medicare will pay 95% of the medications that cost between $8,000 and $15,100 for Mr. Smalley.

MrSmalley Is a Retiree on the Medicare Prescription Drug Plan