Q: Do Medicare supplement plans include prescription drug coverage?
A: No. Modern Medigap — Medicare supplement — plans do not include prescription drug benefits. Instead, Medicare offers separate prescription drug coverage plans. Medicare enrollees can get prescription coverage either by switching to a Medicare Advantage plan (most of them include prescription coverage) or by purchasing Medicare Part D (prescription drug plan, or PPD) to go along with Original Medicare.
However, if you purchased a Medigap policy prior to January 1, 2006 and still have the same plan, your plan may include prescription drug coverage. Plans H, I, and J included limited prescription coverage for people who purchased them prior to 2006, although those plans are no longer sold. If you’re in this situation and you want to join a PDP, you must drop the prescription drug coverage from your Medigap since you can’t have two separate prescription drug coverage policies at the same time.
And although there was a guaranteed issue period for people with pre-2006 Medigap plans to switch to a new Medigap plan and a PPD, if you’re doing that now you’ll probably have to go through medical underwriting for the Medigap plan (unless you qualify for a special enrollment period). You’ll also have to pay a late enrollment penalty for the PDP, if the Medigap plan has been providing your only prescription drug coverage.
The late enrollment penalty applies when people didn’t enroll in Part D when they were first eligible, and either didn’t have prescription coverage while their enrollment was delayed, or had prescription coverage that wasn’t considered creditable. The penalty is 12 percent per year that enrollment was delayed, and is added to the Part D premiums for as long as you have the coverage (see more details about the switch from pre-2006 Medigap plans on page 178 of this booklet).