Catastrophic Coverage

This is a certain stage of Medicare Part D coverage when you only have to pay a relatively small copay or coinsurance amount and your health plan will cover the rest of the cost. This stage becomes effective after leaving the coverage gap, which occurs once you have spent more than $4,700 in out-of-pocket costs for covered drugs during a single year. This is the 2015 amount and changes annually. For example, it was $4,550 in 2014. At this point, you pay either 5% of the cost of drugs or $6.60 per brand name drug and $2.65 per generic drug, whichever amount is greater.

Once Ann spent more than $4,700 to pay for her covered prescription drugs, she was relieved to leave the coverage gap and enter catastrophic coverage, where she paid far less.