Do Medigap policies include drug coverage?
Unfortunately not anymore. No matter which Medigap policy you buy, it will never include prescription drug coverage. In order to have coverage for prescription drugs, you have to add a separate Part D plan to your Medicare insurance.
It is a good idea to add a such a PDP (prescription drug plan) right away, when you are first eligible for Medicare, as you might face a late enrollment penalty if you add it at a later time. You may have to pay this penalty if the insurance you had while you were on Medicare and before you joined the drug plan did not have ‘creditable drug coverage’, meaning that your policy’s coverage was not comparable to Medicare’s standard prescription drug coverage. The penalty will add 1% of Medicare’s national average drug insurance premium to your PDP plan’s premium for each month that your coverage was not creditable.
When you have an insurance that includes drug benefits (e.g. a group health plan from your employer) and are on Medicare, your plan provider is required to send you an annual notice stating whether the coverage is creditable or not. You should always keep these notifications in case you need to make any modifications to your insurance in the future.
If you bought one of the supplemental policy plans H, I, J before January 1st 2006, it may include limited prescription drug coverage, and you may keep it. If you however find this does not meet your current needs anymore, you may consider switching to a stand-alone Part D plan. Your Medigap plan provider will need to remove the prescription drug coverage from your policy, and perhaps adjust your premium, as you are not allowed to have both Part D and a supplement plan that includes drug coverage at the same time.
If the amount of prescriptions you currently use is significant, or is likely to increase in the future, adding a separate Part D Plan to your Medigap insurance is something you need to look into.
Your second option would be to dis-enroll from Medigap completely and join a Medicare advantage plan that includes prescription drugs benefits (MA-PD). With such a plan, you will have all your Medicare benefits including prescription drugs covered by one single policy. As Medicare advantage plans usually have lower premiums because you are bound to use the provider network of the plan, this might be a good option if you need medication regularly, but are on a tight budget.
