Does Medigap Cover Prescriptions?

Medicare Supplement Insurance, commonly known as Medigap, is a type of private health insurance designed to work alongside Original Medicare (Parts A and B). It helps cover some of the out-of-pocket costs that Original Medicare does not, such as deductibles, copayments, and coinsurance. Medigap policies are standardized, meaning the benefits for each plan letter (e.g., Plan G) are the same regardless of the private insurance company selling it. These plans help beneficiaries manage their healthcare expenses by providing more predictable costs.

Understanding Medigap Coverage

Medigap plans primarily cover cost-sharing amounts associated with Original Medicare Parts A and B. This includes expenses like the Medicare Part A deductible for hospital stays, as well as Part A coinsurance and hospital costs for an additional 365 days after Medicare benefits are exhausted. Medigap policies also help pay for the Medicare Part B coinsurance or copayment, which is typically 20% of the Medicare-approved amount for doctor services and outpatient care. Some plans may also cover the Part B deductible, skilled nursing facility care coinsurance, or even foreign travel emergency care up to specified limits.

Medigap policies generally do not cover prescription drugs. This is because Medigap is designed to fill the “gaps” in Original Medicare, and Original Medicare itself does not cover most outpatient prescription medications. If you have a Medigap plan, you will need separate coverage for your prescription drug needs.

Medicare Part D for Prescriptions

Medicare Part D provides prescription drug coverage. These plans are offered by private insurance companies contracted with Medicare. Part D plans help cover the costs of both brand-name and generic prescription medications.

Each Part D plan has a formulary, which is a list of covered drugs, and drugs are often categorized into tiers with varying costs. Beneficiaries typically pay a monthly premium for their Part D plan, in addition to any deductibles, copayments, or coinsurance for their medications. Starting in 2025, the Part D benefit structure has changed significantly, including the elimination of the coverage gap, previously known as the “donut hole.” This change simplifies the coverage stages and introduces a $2,000 annual cap on out-of-pocket spending for covered drugs in the catastrophic coverage phase.

How to Enroll in Part D

Enrollment in a Medicare Part D plan occurs during specific periods. The Initial Enrollment Period (IEP) for Part D aligns with your Original Medicare IEP, spanning a seven-month window around your 65th birthday. This period begins three months before your birth month, includes your birth month, and extends for three months after. Enrolling during this initial period helps avoid potential late enrollment penalties.

If you miss your IEP, the Annual Enrollment Period (AEP) runs from October 15 to December 7 each year. During this time, you can join, switch, or drop a Part D plan, with coverage beginning January 1 of the following year. Special Enrollment Periods (SEPs) may also allow you to enroll or change plans outside these standard periods due to specific life events, such as moving or losing other credible drug coverage. When selecting a plan, compare formularies to ensure your specific medications are covered and consider costs like premiums, deductibles, and copayments, often utilizing the Medicare Plan Finder tool.

Managing Multiple Coverages

Understanding how Medigap, Medicare Part D, and other health coverages interact is important for effective healthcare planning. Medigap policies work in conjunction with Original Medicare, paying their share after Medicare has paid its portion, but they do not influence or coordinate with Part D prescription drug coverage. If you have both Medigap and a Part D plan, they operate independently to cover different aspects of your healthcare costs.

Beneficiaries with existing prescription drug coverage from an employer or union, TRICARE, or VA benefits should evaluate if that coverage is “creditable.” Creditable coverage means it is expected to pay, on average, at least as much as standard Medicare Part D coverage. If you have creditable coverage, you may not need to enroll in Part D immediately, which helps avoid late enrollment penalties. A late enrollment penalty, calculated as 1% of the national base beneficiary premium for each full, uncovered month without creditable coverage, is added to your Part D premium for as long as you have Part D coverage. Confirm the creditable status of any existing drug coverage with your plan administrator to make informed decisions about Part D enrollment.