What Is the Medicare Donut Hole? The Medicare Donut Hole is a coverage void that exists between the conclusion of catastrophic coverage and the beginning of Medicare Part D prescription medication coverage. Given that they must cover the whole cost of their prescription medications, many seniors and other Medicare recipients may find that this coverage gap places a significant financial burden on them. This is frequently a significant price, especially for those who have many medicines or chronic diseases.. The Medicare Donut Hole was created as part of the Medicare Modernization Act of 2003 . This Act established the Medicare Part D program, which provides coverage for prescription drugs .Unfortunately, it also brought about the Donut Hole, a coverage gap when recipients must fund the entire cost of their medicines. The Medicare Donut Hole functions by capping how much money the federal government will allot for prescription medications each year. When Medicare beneficiari...