Prescription drug coverage is provided under Medicare Part D. It is issued by private insurers and is a policy you purchase separately. Plans will vary from insurer to insurer. Some have deductibles. Some do not. Once your deductible is met, the plan pays for some or all of your prescription drug costs up until an annual cost of $2,970. At that point you have reached the Medicare Donut Hole up until an annual cost of $4,750.
Previously, beneficiaries paid 100% of their costs inside the Donut Hole before Part D coverage kicked back in. Under Obamacare, participants now pay 52.5 percent of the cost for brand name drugs and 79 percent of the cost for generic drugs.