What does the "donut hole" refer to in TRICARE?

The term "donut hole" in the context of TRICARE refers to the specific phase where beneficiaries encounter out-of-pocket costs after reaching a certain spending threshold on prescription medications. In this phase, the individual is responsible for a larger portion of their pharmaceutical expenses until they reach another limit that qualifies them for additional coverage, often referred to as catastrophic coverage. This term is drawn from the original donut hole concept in Medicare Part D, which describes a temporary coverage gap, making it familiar to many who manage medical insurance.

This concept is significant for beneficiaries as it highlights the financial responsibility they may face after exceeding their initial coverage limits. Understanding this phase can help beneficiaries plan for their healthcare costs more effectively, ensuring they can manage their budgets in line with their medical needs.