What is the donut hole in Medicare Part D plans?

The donut hole or coverage gap occurs when the total cost for your drugs – including all deductibles, co-pays, and amount the plan pays – reach a certain amount. During the gap, or donut hole, there is no prescription drug coverage and you will pay the entire cost of the drugs until you hit the upper limit and Catastrophic Coverage begins. All Medicare Part D plans have the same donut hole and the plan tracks the expense – you do not have to. 
2012 limits: Donut hole begins when total drug costs reach $2930 and ends when total drug costs reach $6,657.50.