Glossary Term

Initial Coverage Period

The Initial Coverage Period (ICP) is the period of Medicare Part D insurance coverage that begins immediately after the satisfaction of the insurance plan’s deductible. The Donut Hole period, where the ICP’s standard insurance contributions for drug expenses ended, had previously subjected Medicare beneficiaries to higher out-of-pocket expenses. The Donut Hole was progressively phased out beginning in 2011 and it was officially closed in 2020. Starting in 2025, The Inflation Reduction Act (IRA) will cap Part D out-of-pocket expenses for the Initial Coverage Period at $2,000 and adjusted annually.

The Part D plan’s standard cost-sharing (e.g. copayments and coinsurance) apply during the ICP. This cost-sharing scheme does not apply during either the deductible period or Catastrophic Coverage period.


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