MEDIGAP PRESCRIPTION COVERAGE
When it comes to your healthcare, you want to know all of the expenses you might incur after retirement. Since out-of-pocket expenses can put a dent into your budget, finding ways to reduce those costs ease your mind and allow you more freedom with your money. This is especially true when it comes to Medigap coverage.
Medigap plans — officially called Medicare Supplement insurance plans — are extra insurance policies that supplement Original Medicare. They cover out-of-pocket costs like deductibles, coinsurance, and copayments, depending on which plan you choose.
If you’re concerned about prescription coverage, though, how does Medigap handle it? Does Medigap coverage pay for prescription drugs, and if not, how can you get coverage?
DOES MEDIGAP COVERAGE INCLUDE PRESCRIPTIONS?
Medigap coverage does not include prescription drugs. Prior to 2006, some Medigap plans offered prescription coverage, but those plans no longer exist. If you have one of those plans, it might not cover some of your current prescription costs, so you’ll want to verify your coverage through your insurance company.
This is important information to know because, if you want to have prescription coverage after retirement, you need to get it during your initial enrollment period. Otherwise, you might pay more for prescription coverage than you would otherwise, and the longer you wait, the more your premium can increase.
WHAT IS ORIGINAL MEDICARE PART D?
Since Medigap coverage doesn’t include your prescription drug costs, you can get coverage through Medicare Part D. This is the form of Medicare that covers out-of-pocket drug costs.
You can have both Medigap coverage and Medicare Part D. Just remember to apply for both during your initial enrollment period’s (IEP). Your IEP for Medicare Parts A - C begins three months before the month of your 65th birthday. Your IEP for Medicare Supplement begins the month you turn 65 and are enrolled Medicare Part B.
When you have Medicare Part D, there’s a list of covered drugs. They fall into tiers based on various factors, and the tiers determine their price.
Your out-of-pocket costs come in the form of copayments when you get a prescription from your pharmacy. If you have a medical need for a high-copay drug, Medicare will sometimes lower the copayment due to your need. This isn’t guaranteed, though, so consider discussing alternatives with your physician if a recommended drug proves too cost-prohibitive.
Keep in mind that Medicare Part D is separate insurance from Original Medicare Parts A and B. You’ll get your coverage from a third-party insurance company, and that insurance company determines your out-of-pocket costs, which we’ll explore more below.
WHAT IS MEDICARE ADVANTAGE?
There are two ways to get prescription coverage after you qualify for Original Medicare. The first is through Medicare Part D, which we’ve already discussed, and the second is a Medicare Advantage Plan.
Also called Part C, Medicare Advantage is an insurance policy that takes over for Original Medicare Parts A, B, and sometimes D. If your Medicare Advantage plan includes prescription drug coverage, you don’t need Medicare Part D.
Medigap coverage is different from Medicare Advantage because it’s a supplement. In other words, you have to have Original Medicare Parts A and B in addition to your Medigap coverage.
ARE YOU REQUIRED TO HAVE PRESCRIPTION COVERAGE?
There’s no rule that requires you to get insurance for prescription coverage. If you would rather pay for your prescriptions out-of-pocket, you can do so at your local pharmacy or through mail-order programs.
What you’ll pay depends on the type of drug as well as your pharmacy. Some pharmacies have special programs for people who don’t have insurance for prescription drugs. Generic medications can cost as little as $3 or $4, but some prescriptions cost far more without insurance.
WHAT DO PRESCRIPTIONS COST OUT-OF-POCKET?
What you pay out-of-pocket for prescription drugs depends on what type of insurance you have, if any, and the types of drugs you need. Additionally, your pharmacy’s internal costs can impact what you pay.
According to the AARP, Americans pay some of the highest drug costs in the world. For instance, one drug costs approximately $14,000 per year. That’s highly prohibitive for older adults living on fixed incomes.
Similarly, one new cancer drug costs more than $150,000 per patient. Drugs this expensive typically have no generic alternative.
Your out-of-pocket costs can be much lower if you have an insurance plan for prescription drugs, such as Medicare Advantage or Medicare Part D. Every beneficiary must consider the best choice for him or her.
It’s natural to be concerned about all out-of-pocket costs when it comes to healthcare. After you retire and are no longer part of group health insurance, you want to know what to expect.
If you have Medigap coverage, you can’t use it to lower your out-of-pocket expenses for drugs. However, you can get insurance through other methods.
In some cases, you might have prescription coverage through the same insurance company that handles your Medigap coverage. There’s nothing wrong with that. Just remember that they’re two separate policies, so you must pay the premiums on both to keep them active each month.
If you have a Medigap policy that predates 2006 and includes prescription coverage, call your insurer to verify what it still covers. If it’s inadequate, you can cancel the prescription part of your plan, but keep the rest of your Medigap plan. That way, you don’t get subject to underwriting.
At that point, you can join an Original Medicare Part D plan to regain prescription coverage that might be more comprehensive.
To learn more about Medicare Supplement insurance and to investigate potential Medigap coverage options, compare plans with Ensurem’s Medigap Quoter. You’ll get quotes from insurance companies based on your preferences.