Violet Lawton fell into the hole -- the "doughnut hole" in Medicare's prescription drug plan. 

The hole is a gap in coverage that Congress built into Medicare's first-ever prescription plan. The gap requires most people with drug expenses over $2,250 to pay 100 percent out of pocket before coverage resumes at the $5,100 level. 

"I had expected it, but it was like waiting for someone to stick a needle in your arm," said Lawton, 80, of Alameda. "You're waiting but -- ow! -- it hurts when it happens." 

Millions of beneficiaries like Lawton will have to find a way to survive Medicare's notorious doughnut hole. PricewaterhouseCoopers estimated that about 3.4 million beneficiaries, or about 8 percent of those enrolled in the plan, will fall into the gap this year. 

Under the standard Medicare benefit, people generally have to pay a $250 deductible and 25 percent of drug costs up to $2,250. When costs paid by both the plan and the beneficiary reach that $2,250 figure, the beneficiary must pay all drug expenses until total spending reaches $5,100 -- generally a $2,850 gap. After that, the beneficiary is covered for all but 5 percent of drug costs. 

Lawton could not afford the $520 in monthly costs she would have had to pay because of the doughnut hole. So she figured out a way to cut her drug expenses by nearly half. 

She asked her doctor if she really needed all her medications and found she could stop taking two. She also switched to cheaper versions of two drugs. Her monthly tab dropped to $278. 

Many unaffected 

Most people won't have Lawton's problem -- they'll never hit the hole. 

More than a third of beneficiaries get their prescription drug coverage through an employer or other program and are not subject to coverage gaps. Some beneficiaries chose higher-cost drug benefit plans that provide some coverage through the gap. Others don't take enough drugs to reach the spending limit. 

Also shielded from the doughnut hole are low-income people who qualify for Medicare subsidies and those who receive medication through both Medicare and Medicaid. 

Medicare's prescription drug coverage gap has been well publicized. Still, many seniors are unaware of it, don't fully understand it or hit it sooner than they expected. 

Some are receiving warnings from their plans that they are nearing their spending limits. Others are discovering a doughnut hole only when they visit the pharmacy and find their $25 prescription drug co-payments replaced by bills for hundreds of dollars. 

San Rafael resident Jerry Jacob mistakenly thought he had enrolled in a plan that provided him coverage through the gap. So it was a rude awakening in June when he received a bill for $1,400. 

Jacob, 67, takes several expensive medications and was able to spend his way out of the coverage gap with one 90-day supply of drugs. "I can't afford it, but I can afford it. It comes out of savings account, not my income," he said. "I could not figure an option for beating it." 

But many people don't have the financial means to spend their way out of the hole, said Marilyn Stebbins, professor of clinical pharmacology at UCSF who runs a program for low-income seniors in Sacramento. 

"The majority of people who get into it won't get out of it," Stebbins said. 

That's because if people hit the gap more than halfway through the year, they are unlikely to reach the spending threshold before their policy finishes at the end of the year. 

The prospect of continuing to pay premiums for virtually no coverage frustrates many seniors. 

Bud Taylor of Los Altos gets his prescription drugs through the Department of Veterans Affairs. But his wife, Gladys, purchased a plan with a $32 premium. She hit the hole in June. 

"I'll tell you right now it's a bad investment. We're not going to get out of the hole. By the time the end of the year comes, we'll start all over again," said Taylor, 82. "I've got to stop the premiums, go to Canada and get my drugs from there like we had been doing." 

Some beneficiaries are glad to have the insurance in case their drug needs increase. 

Marilyn Benioff of San Francisco knows she'll never get out of the hole, even though she'll be spending about $300 a month on her drugs for the rest of the year. Benioff said she hit the "black hole" about a month ago. 

"I just have to bite the bullet and pay it. I really don't have any alternatives," she said. "Next year, I may be in poorhouse. This year, we're managing." 

Where people buy their drugs is important when it comes to applying those purchases toward the doughnut hole. 

Insurers contract with specific pharmacies. They will count only those purchases made in their network in calculating when a beneficiary has reached the hole. Additionally, drugs purchased through Canadian or other international pharmacies don't count. 

Some health advocates suggest that beneficiaries carefully weigh whether the costs of getting out of the hole are worth it. For example, if a beneficiary determines he or she will never reach the spending threshold before the end of the year, it might make more sense to buy drugs strictly based on cost rather than stay with their plan's network of drug providers. 

"If they calculate and realize they will never reach the catastrophic level, they can go anywhere they want to get their drugs," said Diana Gray, program manager for the Health Insurance Counseling and Advocacy Program in San Mateo County. 

Gray also suggests that patients consider drug discount card programs offered by a variety of companies, including drug stores. For a specific medication, beneficiaries can contact the manufacturer to see if they qualify for a company's patient assistance program, which generally will have income eligibility requirements. 

Some people could save money by splitting pills. This involves buying higher doses of a medication and cutting tablets in half. But patients should seek their physician's advice before doing so. 

Alternatives for 2007 

Beneficiaries who have already fallen into the hole might want to consider purchasing a more comprehensive policy for 2007, Gray said. Several companies offer policies with higher monthly premiums than standard plans. But they offer partial or complete coverage through the gap. 

Even more beneficiaries could fall into the hole next year. In this first year of the program, people were allowed to sign up as late as May. Next year's beneficiaries will have a full year of coverage and might hit the hole earlier. 

While the hole may be onerous, the new benefit has helped many Medicare beneficiaries who would otherwise have no drug coverage, health experts say. 

"People are saying they can't afford it when they hit the doughnut, and I'll take their word for it," said Robert Goldberg, vice president for the Center for Medicine and the Public Interest, a consumer group that receives funding from drug companies. "But what were they doing before (when) there was just a hole, and no doughnut?" 

Minding the gap 

Here are tips for Medicare beneficiaries to survive the costly "doughnut hole": 

Find out if you can switch to lower-cost or generic drugs. 

See if you qualify for assistance through a government program or pharmaceutical company. 

Shop for the best drug prices. If you plan to apply purchases toward the doughnut hole, make sure the pharmacy is in your plan's network. 

Evaluate coverage options for next year. Consider total costs, not just monthly premiums.