If you’re enrolled in a prescription-drug plan under Part D of the federal Medicare health insurance program, a coverage gap known as the donut hole exists if your drug costs exceed a certain level.

In 2011 here is how  Medicare Part D coverage works

- You pay out-of-pocket for monthly Part D premiums all year.

- You pay 100% of your drug costs until you reach the $310 deductible amount.

-After reaching the deductible, you pay 25% of the cost of your drugs, while the Part D plan pays the rest, until the total that you and your plan spend on your drugs reaches $2,840.

- Once you reach this limit, you have hit the donut hole coverage gap; you’re now responsible for the full cost of your drugs until the total you have spent for your drugs reaches the yearly out-of-pocket spending limit of $4,550.

- After this yearly spending limit, you’re responsible for only a small amount of the cost, usually 5% of the cost of your drugs.

If you fall into the donut hole in 2011, you’ll receive 50% discounts for brand-name drugs, and Medicare will begin paying 7% of the price for generic drugs.

If you tumble into the donut hole this year, you won’t get the $250 check your received n 2011, but you will get a 50% discount on covered brand name prescription drugs.

The discount in the donut hole for brand-name and generic prescription drugs applies to anybody enrolled in a Part D plan and to people in most Medicare Advantage plans.

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