Do Medicare Supplement Plans Cover Prescription Drugs?

Medicare Supplement Plans, often called Medigap, are private insurance policies designed to cover healthcare costs Original Medicare (Parts A and B) does not. These plans work with Original Medicare to reduce out-of-pocket expenses like deductibles, coinsurance, and copayments. They provide standardized coverage, assisting beneficiaries with financial predictability for medical services.

Understanding Medicare Supplement Plans

Medicare Supplement Plans are standardized by the federal government, identified by letters, and help cover various out-of-pocket costs associated with Original Medicare. These include the Part A coinsurance and hospital costs for an additional 365 days after Medicare benefits are exhausted, and the Part B coinsurance or copayment, which is typically 20% of the Medicare-approved amount. Medigap policies also cover the first three pints of blood and Part A hospice care coinsurance or copayment. Some plans offer additional benefits, including the Part A deductible, skilled nursing facility coinsurance, Part B excess charges, and emergency medical care when traveling outside the United States.

Medigap plans do not cover all healthcare costs, explicitly excluding prescription drug coverage. Beyond prescription drugs, Medigap plans generally do not cover services like long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing. These plans supplement Original Medicare’s coverage for medical and hospital services.

Medicare Prescription Drug Coverage

Since Medicare Supplement Plans do not cover prescription drugs, Medicare offers Part D to address these costs. Medicare Part D is a voluntary program helping beneficiaries pay for outpatient prescription medications. Unlike Original Medicare, private insurance companies approved by Medicare offer and administer Part D plans. Specific costs and covered drugs can vary significantly between different Part D plans.

Part D plans involve cost-sharing components like a monthly premium, an annual deductible, and copayments or coinsurance for prescriptions. In 2025, the maximum deductible a Part D plan can charge is $590, though some plans may offer a lower or no deductible. A significant change for 2025 is the elimination of the “coverage gap,” also known as the “donut hole.” Once a beneficiary’s out-of-pocket spending on covered drugs reaches $2,000 in 2025, they will pay nothing for covered medications for the remainder of the year, entering the catastrophic coverage phase. Each Part D plan maintains a formulary, a list of covered drugs often categorized into tiers with varying cost-sharing amounts.

Getting Prescription Drug Coverage

Obtaining Medicare Part D coverage involves understanding enrollment periods and selecting a suitable plan. The primary enrollment opportunity is the Initial Enrollment Period (IEP), a seven-month window around your 65th birthday or when you first become eligible for Medicare. If you miss your IEP, you can enroll or change plans during the Annual Enrollment Period (AEP), from October 15 to December 7 each year, with coverage beginning January 1 of the following year. Special Enrollment Periods (SEPs) may also be available under specific circumstances, including moving to a new service area or losing other creditable drug coverage.

When choosing a Medicare Part D plan, compare options beyond the monthly premium. Evaluate a plan’s formulary to ensure it includes your necessary prescription medications, as formularies can differ widely and may change annually. Consider the plan’s pharmacy network to confirm preferred pharmacies are included, and assess estimated total annual costs, including premiums, deductibles, copayments, and coinsurance. The Medicare Plan Finder tool on Medicare.gov is a valuable resource for comparing available plans, inputting your specific drugs, and estimating out-of-pocket expenses.

What to Consider for Drug Coverage

Several considerations can impact your Medicare Part D coverage and costs. One factor is the Part D late enrollment penalty, which may apply if you go 63 consecutive days or more without Medicare Part D or other creditable drug coverage after your initial enrollment period ends. This penalty is calculated as 1% of the national base beneficiary premium for each full, uncovered month, and is added to your monthly premium for as long as you have Part D coverage. For example, the national base beneficiary premium for 2025 is $36.78.

Regularly checking your plan’s formulary is essential because drug lists can change each year, potentially affecting which medications are covered or their cost-sharing tiers. Even if your current plan meets your needs, review your Part D coverage annually during the Annual Enrollment Period from October 15 to December 7. This yearly review allows you to compare your current plan with other options to ensure it remains the most cost-effective and comprehensive choice for your prescription drug needs.