No, Medicare supplement (Medigap) plans sold after 2005 do not include significant prescription drug coverage.
But for those who can afford a monthly premium, Medigap plans do provide a number of other advantages over Medicare Advantage plans. And the lack of built-in prescription drug coverage in Medigap plans is easily remedied: You can purchase a Part D prescription drug plan to work alongside your Medigap coverage.
Learn More: Not Sure? Start Here! A Guide to Medicare Basics
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Prescription Drug Coverage and Medicare
Original Medicare (Medicare Part A and Part B) don’t include significant prescription drug coverage by themselves.
If you don’t purchase additional prescription drug coverage, the only prescription drug protection Original Medicare provides by itself is help with the cost of prescription drugs administered while you are actually hospitalized (covered under Part A, but subject to a significant deductible) or in a doctor’s office (covered under Part B, subject to a $240 Part B deductible, and then a 20 percent coinsurance after that.
If you want prescription drug coverage as a Medicare beneficiary, you essentially have two choices:
- Purchase a Medicare Advantage (Medicare Part C) plan that includes prescription drug coverage built right into the plan, OR
- Purchase a Medicare Part D “stand-alone” plan. These plans function alongside your Medigap insurance policy. They also work well with a Medi-Share 65+ health sharing plan, which is an excellent and affordable alternative to Medigap plans for many.
Advantages of Medigap Plans
While Medicare Advantage plans are managed care plans that require you to use their own approved providers, Medigap plans allow you to use your benefits with any doctor that takes Medicare patients, anywhere in the country.
They are therefore a great match for anyone who does significant traveling, which may take them out of a Medicare Advantage network coverage area.
Certain Medigap plans also include foreign travel benefits of up to $50,000, which can help pay for medical care you need while traveling outside of the U.S. Medicare Advantage plans generally don’t provide significant coverage for those traveling outside of the country.
Staying on Your Employer’s Plan
Another alternative, if you are still in the workforce, is to remain on your employer’s plan as long as possible, and take advantage of the prescription drug and other coverage in your employers’ group plan.
As long as you remain on your employers’ plan, and your employer’s plan is fully qualified under the Affordable Care Act, you will maintain creditable coverage and won’t have to worry about late enrollment penalties when you enroll in a Medigap, Medicare Advantage, or Medicare Part D plan.
However, if your coverage lapses longer than 63 days, and you don’t get Medicare or other coverage in place during that entire time, you may incur late enrollment penalties.
If you’ve maintained creditable coverage, however, you can enroll in a Medigap plan at any time, without late enrollment fees, and without medical underwriting. That means you cannot be turned down due to your medical condition or history.
So if you’re over 65 and lose your employer group coverage, it’s important to take action quickly to enroll in Medicare.
Learn More: Medicare When You Work Past 65
Note: Purchasing a Part D prescription drug plan is optional. You don’t have to have prescription drug coverage. But with some drugs costing tens or even hundreds of thousands of dollars per course of treatment, we highly recommend owning some form of prescription drug coverage in retirement.
You should purchase a Medicare Part D plan when you are first eligible, or when you first leave your employer’s plan… even if you aren’t currently taking any prescription medications at all.
That’s because if you wait until later to buy a Medicare Part D plan, you could face a late enrollment fee.
IRMAA
If you have high income, you may have to pay more for your Medicare Part D plan. This additional amount is called the Medicare Income-Related Monthly Adjusted Amount, or IRMAA.
To determine whether you are subject to IRMAA, Medicare uses your 2023 income tax return. If your 2023 return exceeds $103,000 (individuals) or $206,000 (couples), your 2024 premium for Part D coverage will range from $244.60 to $594.00, depending on your income last year.
Note that some types of income and assets are not counted when determining your IRMAA. For more information, see the “Extra Help” section on page 27.
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What to Do Now
The best thing to do is contact a Personal Benefits Manager and make an appointment for a FREE personalized consultation and quote.
We can analyze your situation, lifestyle, and budget, and help you zero in on the best Medicare and prescription drug strategy for your individual needs.
For Further Reading:
Whitney Kline is one of your Personal Benefits Managers at Medigap Advisors. She loves working for Medigap Advisors especially helping clients choose the right Medicare plan.