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Medicare Supplement Insurance and Prescription Drug Coverage

Adriana Anderson by Adriana Anderson | Licensed since 2009
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This article was updated on: 02/25/2016

There are currently two ways to get prescription drug coverage through Medicare. The first is through a stand-alone Medicare Part D Prescription Drug Plan. The second option is to choose a Medicare Advantage plan (Part C) that provides prescription drug coverage, also known as a Medicare Advantage Prescription Drug plan (MAPD). Prescription drug coverage is optional, and you may purchase it from private insurance companies that contract with Medicare.

Some Medicare Supplement (Medigap) policies sold before January 1, 2006 provided limited prescription drug coverage, but these polices are no longer available. Any Medigap policies sold after this date do not include coverage for prescription drugs.

Medigap plans with prescription drug coverage

If you have an older Medigap policy with prescription drug coverage, first verify with your insurance company whether that coverage is creditable. If it is, you can keep the policy, but read the plan’s annual Notice of Creditable Coverage to make sure it’s still creditable from year to year. The plan should send you this notice in September of each year.

If your prescription drug coverage isn’t considered creditable, here are some options for getting additional drug coverage:

Option #1: You can keep your Medigap policy and join a stand-alone Medicare Part D Prescription Drug Plan. Before considering this change, you should first compare the drug coverage you have now with the coverage provided by Medicare Part D plans available in your area.

Important note: You cannot have both a Medicare Part D Prescription Drug Plan and a Medigap policy with prescription drug coverage. If you join a Medicare Part D Prescription Drug Plan, you must ask your Medigap insurance company to remove the prescription drug coverage from your Medigap policy and adjust your premium. Keep in mind that once the drug coverage is removed from your Medigap policy, you can’t get that coverage back.

Option #2: You can disenroll from your Medigap plan and get all of your Medicare coverage (Medicare Part A, Part B, and Part D) through a Medicare Advantage Prescription Drug plan. Again, before making this change, you should first carefully compare all the medical and prescription drug benefits you have now with the Medicare Advantage Prescription Drug plans offered in your area. Keep in mind that if you drop your Medigap plan, you may not be able to get it back (and you won’t get the drug benefit portion back). You can enroll in a Medicare Advantage plan during the Annual Election Period.

Important note: If you’re enrolled in a Medicare Part D Prescription Drug Plan and join a Medicare Advantage Prescription Drug plan, you will be automatically disenrolled from the Medicare Part D Prescription Drug Plan.

Medigap plans without prescription drug coverage

If you have Original Medicare, Part A and Part B, and a Medigap policy without prescription drug coverage, here are three options:

Option #1: Keep everything as is and join a stand-alone Medicare Part D Prescription Drug Plan.

Option #2: Disenroll from your Medigap plan and get your Original Medicare and Medicare Part D benefits through a Medicare Advantage Prescription Drug plan.

Option #3: Keep everything as is and go without prescription drug coverage. Again, this coverage is optional, but if you decide to add it at some point, you might be charged a late enrollment penalty.

If you choose either of the first two options, you may want to be mindful about the timing. In most cases you can only join a Medicare Part D plan or Medicare Advantage plan during the fall Open Enrollment Period, also known as the Annual Election Period. This runs from October 15 to December 7. Your coverage will begin on January 1 as long as the plan gets your enrollment request by December 7.

Medicare Part D late-enrollment penalty

If you have a Medigap policy without other creditable prescription drug coverage and wish to join a Medicare Part D Prescription Drug Plan, you may have to pay a late enrollment penalty. This penalty is a higher premium than if you had joined a Medicare Part D Prescription Drug Plan when you were first eligible.

Whether you have to pay a penalty depends on whether your Medigap policy has prescription drug coverage, and whether that coverage is creditable (at least as good as Medicare’s standard prescription drug coverage). The late-enrollment penalty applies only if you have gone 63 continuous days or more without creditable prescription drug coverage since you first became eligible for Medicare Part D.

Does your Medigap policy have prescription drug coverage? Is it “creditable coverage”? Might you have to pay a late enrollment penalty?
Yes Yes Likely not
Yes No Yes
No N/A Yes

As mentioned above, your Medigap insurance company must send you a notice every year telling you if your prescription drug coverage is creditable. Keep these notices, as you may need to show that you had creditable prescription drug coverage to avoid paying a late enrollment penalty.

If you’re not enrolled in a Medicare Part D Prescription Drug Plan, but have prescription drug coverage through another insurance company, such as through an employer-sponsored group plan, make sure that coverage is creditable every year.

Although Medigap plans can be useful for supplementing your Original Medicare coverage, Medicare Supplement plans sold today no longer include prescription drug coverage. Even if you have an older Medigap plan that has drug coverage, it may not cover your current medications.

If you have questions about how Medigap or Medicare Part D prescription drug coverage  works, I’m here to help. You can learn more about me by clicking the “View profile” link beneath my picture. If you’d like to talk over the phone or get more information by email, use the links below to schedule a phone appointment or have me email you more information. Or, if you’re ready, you can look for plans immediately by clicking the Compare Plans button on this page. If you want to talk to someone right away, you can call eHealth to reach a licensed insurance agent.

Call Medicare.com’s licensed insurance agents at 1-844-847-2659, TTY users 711; Monday through Friday, 8AM to 8PM ET.

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