Prescription drug coverage is important to everyone, but Medicare beneficiaries are more prone to require medications due to age, illness, or injury. Original Medicare Parts A and B do not include prescription drug coverage, so many Medicare enrollees need to understand their options. Medigap, or Medicare Supplement plans, including Plan G, do not include prescription drug coverage, but may offer you savings from other out-of-pocket costs.
Medicare Part D is prescription drug coverage, and is available through either a stand-alone Prescription Drug Plan (PDP), or through a Medicare Advantage plan that includes drug coverage. If you qualify for Medicare, you’ll have options. For instance, if you have Original Medicare, you can buy a Medigap plan and/or a stand-alone PDP. Alternatively, you can enroll in a Medicare Advantage plan that includes drug coverage.
Let’s discuss your options so you can find the coverage that’s right for you.
Medicare Supplement Insurance (Medigap)
Original Medicare covers a wide range of healthcare services, including inpatient care, outpatient services, and more. Cost-sharing, including deductibles, coinsurance and copayments, can add up depending on your medical needs. Many beneficiaries look for ways to lower their out-of-pocket expenses. Medigap, also known as Medicare Supplement, policies help cover some of the costs that Original Medicare does not.
Although standardized by the federal government and identified by letters A through N, plan benefits and costs can vary.
Medicare Supplement Plan G
Of the ten Medicare Supplement insurance policies, Plan G is the most comprehensive plan available to newly eligible Medicare recipients. This policy covers coinsurance and copayments as well as the Part A deductible. Additionally, Plan G provides some benefits that Original Medicare does not cover, including:
- Excess charges in states where non-participating providers are permitted to bill above the Medicare-approved amount
- Up to 80% of the cost of emergency healthcare services needed while traveling outside the U.S.
- The first three units of blood a provider has to buy for you
Do Medigap plans cover prescription drugs?
Medicare Supplement insurance does not cover prescription drugs (Part D). However, some insurance carriers sell different types of plans, including Medigap policies, stand-alone Prescription Drug Plans (PDPs), and/or Medicare Advantage plans with or without prescription drug coverage. Keep in mind that you can’t purchase a Medigap plan if you’re enrolled in a Medicare Advantage plan.
If you enroll in a PDP from the same insurer that sold you Plan G, expect to pay two separate premiums for these policies. Keep in mind that monthly premiums for Medigap policies and stand-alone Prescription Drug Plans (PDPs) will be paid in addition to the Part B premium.
Premium for stand-alone Prescription Drug Plans (PDPs)
Monthly premiums for stand-alone Prescription Drug Plans (PDPs) vary depending on the insurance carrier, your location, and the plan you choose. The formulary, the plan’s approved drug list, also differs, so be sure the policy covers your current prescription medications before enrolling.
The following factors may impact your price for stand-alone Prescription Drug Plans (PDPs).
- If you enroll after your Initial Enrollment Period, you may be subject to a late enrollment penalty, which is added to your Part D premium every month while you have Part D.
- An income-related monthly adjustment (IRMAA) is added to your monthly premium if your income exceeds a predetermined limit.
Enrollment in stand-alone Prescription Drug Plans (PDPs)
The best time to enroll in stand-alone Prescription Drug Plans (PDPs) is when you first become eligible for Medicare. The Initial Enrollment Period centers around your 65th birthday, starting three months before the month of your 65th birthday and ending three months after that month.
If you don’t sign up for prescription drug coverage during your Initial Enrollment Period, and do not have other creditable coverage, you may have to pay a late penalty when you decide to enroll later on. You can make changes to your coverage every year during the Open Enrollment Period, October 15 to December 7.
Keep in mind that the annual Open Enrollment Period does not apply to Medigap. The Medigap Open Enrollment Period starts the first day of the month of your 65th birthday and ends six months later. During this period, you have a guaranteed issue right to buy any Medigap plan sold in your state. After this 6 month period has ended, you may be subject to medical underwriting and be charged more or refused coverage based on pre-existing conditions.
Medicare Advantage (MA)
If you are looking for a single plan that includes your Part A, Part B and prescription medication coverage, search for a Medicare Advantage plan that includes prescription drug coverage. Most MA plans include prescription drug coverage along with Part A and Part B. Medicare Advantage is also known as Part C.
You cannot have both a Medigap plan and an MA plan. A licensed agent can help you determine the most suitable options for your healthcare needs and budget.