As with many federal programs, Medicare changes over time. One area where this may be noticeable is drug coverage. Luckily, for those looking to get some coverage for their prescriptions, there are solutions. Read on to learn about Medicare Part D and how to get your prescriptions covered.
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Do Medigap Plans Cover Drugs?
Medigap plans no longer cover prescription drugs.
Up until 2006, Medigap did cover prescription drugs. Also called Medicare supplement plans, Medigap augmented the coverage lacking in other Medicare plans, including for prescription drugs. Since then, prescription drug coverage has shifted to a different Medicare program, Part D.
The current functions of Medicare plans are:
- Medicare Part A and Medicare Part B (original Medicare) cover hospital and medical (primary healthcare) costs for seniors beginning at age 65.
- Medicare Part C (Medicare Advantage) provides all the services of Parts A and B but is offered through private insurers and includes extended benefits like vision, dental, and prescription drugs.
- Medicare Part D covers prescription drugs as a supplement to either Original Medicare or Medicare Advantage through a private company.
How Medicare Supplement Members Pay for Prescriptions
To secure prescription benefits, Medicare recipients must ultimately pursue Medicare Part D.
Some receive benefits through an employer or union-sponsored plan or qualify for Medicare Part D under Medicare Advantage. Alternatively, recipients can add a standalone Part D plan to existing coverage under Medicare parts A and B.
Enrolling in Part D, whether included in a Part C plan or as a supplement to original Medicare, may add a nominal fee to one’s monthly premium. Costs vary by provider and service area. Candidates must apply for Part D as soon as they are eligible to avoid a lapse in coverage of more than 63 days and a subsequent late enrollment penalty.
Grandfathered Medigap Plans
If you enrolled before 2006 in a Medicare plan (Parts H, I, or J, pre-2006) that included prescription coverage, you may still enjoy drug coverage under a grandfathered Medigap plan. Medicare typically allows grandfathered Medigap recipients to continue their coverage for as long as they pay their premiums; however, they can also apply for Part D coverage through a Part C plan or alongside original Medicare.
Employer or Union Retiree Coverage
Employer or union retiree coverage may supplement or replace a Medicare plan. Some employers and unions pay whole or partial Medicare premiums for current workers or retirees. Others require employees to join a specific Medicare plan or supply their own retiree plan of creditable coverage instead of Medicare.
Limited Part A and Part B Drug Coverage
Medicare parts A and B offer limited drug coverage under the scope of hospitalization (Part A) or outpatient medical (Part B) care. For example, original Medicare covers some antigens, injectable osteoporosis drugs, end-stage renal disease treatment, and drugs used with durable medical equipment such as a nebulizer. Drugs covered by Parts A and B generally include only those administered by a physician in an office or hospital or for specific conditions at home.
How Will Part D Coverage Complement Your Medicare Supplement?
Medicare Part D includes a tiered system of drug coverage. All plans cover “protected” medications such as HIV/AIDS and Cancer treatments. Each Part D plan sets its own “formulary,” or list of covered prescription drugs, offering brand-name and generic options. Medicare Part D drugs range in cost from tier one (lowest copayment) to tier three and top-tier specialty drugs (highest copayment).
Medicare Part D extends the drug coverage provided by original Medicare. Once recipients get expanded Medicare drug coverage through a Part C or add-on Part D option, they can enjoy savings on prescription medications, including insulin, blood-pressure regulators, and top-tier drugs.
Can I Drop My Medigap Plan’s Prescription Drug Coverage and Enroll in Part D?
While Medigap recipients who enrolled before 2006 enjoy a “guaranteed issue right” to new Medigap prescription coverage or a Part D plan, post-2006 Medigap enrollees must undergo a medical underwriting process to switch coverage. This process requires the insurance carrier to approve or deny coverage outside the standard enrollment period.
Ideally, a candidate could continue receiving all other Medigap benefits except for prescription coverage, which they would replace with Part D. Medigap prescription drug coverage through a recipient’s employer or union is the only type of coverage deemed “creditable” to keep without incurring a penalty for delayed Part D enrollment as soon as one becomes eligible.
Will I Owe a Part D Penalty if I Drop My Medigap Prescription Drug Coverage?
A person who delays enrollment in a Part D plan or goes without “creditable” prescription coverage for more than 63 days may owe a penalty. Medicare requires newly eligible candidates to enroll in Part D during the first available annual enrollment period or adds a recurring penalty to their monthly premium for the remainder of their enrollment.
The penalty multiplies 1% of the national base premium by the number of whole months a recipient goes without creditable coverage or delays enrollment in Part D. In addition to incurring a costly permanent fee, delaying prescription drug coverage can be dangerous for recipients who may suddenly require a critical medication but are uninsured between limited enrollment periods.