You can purchase prescription drug coverage through Medicare in one of two ways. The most common way is to buy a Medicare Part D Plan (aka, “PDP”). The second way is to enroll in a Medicare Advantage Plan that includes Part D (aka, “MAPD”) . All PDPs sold today are 100% compatible with all Medigap supplemental Medicare policies. This is not true in the case of Medicare Advantage plans. You cannot purchase Medicare supplement insurance if you are enrolled in Medicare Advantage.
What are my options if I have a Medigap policy but do not have prescription drug coverage?
If you have Medicare Part A and Part B and a Medigap policy you have two options:
- Keep your supplemental Medicare insurance policy and purchase the Medicare Part D Plan of your choice. Be certain that the PDP you want covers your prescribed medications at a favorable rate; or
- Cancel your Medigap insurance policy and get your health care insurance through an MAPD HMO or PPO plan. When you enroll in a Medicare Advantage Plan you will be automatically disenrolled from Original Medicare (Part A and Part B).
Timing is critical. Unlike your Medigap policy, you can only enroll in Medicare Part D and Medicare Advantage during the Annual Enrollment Period (AEP), which begins 15 October and ends on 7 December (Obamacare does not change Medicare’s AEP dates). Even though you join during the open enrollment period, your coverage does not begin until 1 January. The only exception to this rule is when you turn 65. On that year you have an Individual Enrollment Period starting the month before your birthday and ending the month after your birthday.
What if I have a Medigap policy that includes prescription drug coverage?
Some Medicare supplements sold prior to 2006 (Plans H, I, J) have limited prescription drug coverage. These insurance polices are no longer available. If you have a Plan H, I or J with prescription drug coverage, there are two options available to you:
- You can change your Medigap policy to one of the 10 lettered plans currently available and purchase a PDP plan. Before doing so, first compare the drug coverage your Medigap policy offers with the coverage provided by Medicare Part D plans sold in your state. Don’t forget, the new healthcare law will eliminate the coverage gap in a few more years.
- Cancel your Medigap policy and enroll in a MAPD. This will give you all of your Medicare coverage, Parts A, B, and D, through an HMO or PPO private healthcare plan. When you enroll in Medicare Advantage, you will disenrolled from Original Medicare.
What is the Part D Late Enrollment Penalty, and do I have to pay it?
If you purchased a Medigap policy when you were first eligible, but did not purchase a PDP, Medicare may have to pay a higher premium. This is the Medicare Late Enrollment Penalty. There are some exceptions. Specifically, if your Medigap policy includes credible prescription drug coverage you will be exempt.