OBJECTIVES: It is important to study the extent to which Medicare Part D’s unique benefit structure (with a gap in the middle) affects seniors’ adherence to prescription medications. Therefore, this study had following objectives: 1) To identify characteristics of beneficiaries reaching and not reaching the coverage gap, and 2) To study the impact of a complete gap in coverage on beneficiaries’ adherence to prescription medications. METHODS: This was a retrospective quasi-experimental analysis with matched control group using a nationally representative sample of Part D enrollees of stand-alone prescription drug plans (PDPs) from 2008 Centers for Medicare and Medicaid (CMS) Part D and summary datasets. In addition to studying differences in characteristics of those who did and did not reach the coverage gap in 2008, adherence to oral medications taken from one or more of the seven pre-defined therapeutic classes was measured using Medication Possession Ratio (MPR). Appropriate statistical tests for significance were performed using SAS 9.1. RESULTS: A quarter of our sample (24.42%) reached the coverage gap in 2008, mostly by end of September. Of these, 12.10% (2.97% of the total sample) reached the catastrophic coverage phase. Although the two groups had similar demographic attributes, beneficiaries reaching the coverage gap had higher prescription medication use compared to those not reaching the coverage gap (11.25(+4.63) vs. 7.39(+3.75)). Beneficiaries reaching the gap experienced significantly greater reductions in adherence (3.00% more for beta-blockers to 9.00% more for oral anti-diabetic agents, p-value<0.0001), compared to those not reaching the gap. During the coverage gap period, a considerable proportion of beneficiaries stopped taking medications in both the groups and the proportion of beneficiaries considered adherent (MPR>0.80) also dropped for both the groups. CONCLUSIONS: Medicare Part D beneficiaries face significant barriers to adherence, especially those reaching the coverage gap. Interventions to improve adherence should target all beneficiaries, particularly those using multiple medications.