Do Medigap policies include prescription drugs?
Since 2006, Medigap policies are not allowed to include prescription drug coverage anymore. So, if you want prescription drug coverage, you need to enroll in a separate Part D prescription drug plan.
If you still have one of the ‘old’ supplemental insurance policies and it covers prescription drugs, you may keep it. If you however would like to add prescription drug coverage with a stand-alone Part D plan, you need to contact your Medigap plan provider in order to remove the prescription drug coverage under your policy. Your premium will most likely be adjusted. You can NOT have both Medicare Part D and Medicare Supplement plan drug coverage at the same time.
Carefully compare before you decide, because depending on your personal medical situation, either the Medicare Part D plan or the drug coverage that is included in your Medicare Supplement plan may be more beneficial. As a rule of thumb, if the amount of prescriptions you currently use is higher than in the past or is likely to increase in the future, a separate Part D Plan is most likely your better option.
If it is a while since you have signed up for a Medigap policy, and think it would be better for you now to switch to a stand-alone Part D plan, you also need to consider that you might have to pay a late enrollment penalty if you switch. This depends on whether or not your Medigap policy includes ‘creditable prescription drug coverage’, which means that the amount of drug coverage of your supplemental policy is on average comparable to Medicare’s standard prescription drug coverage.
In case your Medigap plan has no creditable coverage, you will most likely have a penalty added to your monthly premium. You are charged 1% of Medicare’s national average drug insurance premium for each month that you did not have creditable coverage.
Your insurance carrier is required to send you each year a notice stating whether the prescription drug coverage in your plan policy is creditable. It is a good idea to keep these confirmation letters in case you decide later to switch to a Medicare Prescription Drug Plan.
