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Medigap versus Medicare Prescription Drug Coverage

Medicare offers prescription drug coverage known as Part D for all people with Medicare. Medicare approves insurance companies and other private companies to offer stand-alone drug plans. These plans help people with the original Medicare Plan pay for their prescription drug costs.

If you have a Medigap policy with prescription drug coverage it means you chose not to get the prescription drug coverage when you were first eligible. Switching to a Medicare prescription drug plan is fairly easy and may ultimately save you money.

With a Medigap policy you pay the whole premium for your Medigap prescription drug coverage. With a Medicare prescription drug plan, you may have to pay a premium, but Medicare pays a large part of it for you. In addition, please note that companies can no longer sell Medigap policies with prescription drug coverage. This means that individuals with Medigap policies are likely to see increases in premiums at a rapid pace versus with a Medicare prescription drug plan.

Medigap policies have a maximum amount that they pay each year for prescription drugs. While the Medicare prescription drug coverage doesn’t have a maximum amount. In fact, the higher your drug costs, the greater protection provided to you by Medicare.

Your Options

1. Keep your Medigap policy and remove its prescription drug coverage.

You may join a Medicare prescription drug plan and keep your Medigap policy. All that is required is that you tell your Medigap carrier what the effective date is for your Medicare prescription drug coverage. Once your Medigap carrier knows you have a Medicare prescription drug plan they will remove the prescription drug coverage from your Medigap policy.

2. Join a Medicare Advantage Plan that includes prescription drug coverage.

Joining a Medicare Advantage Plan (like an HMO or PPO) you will get all of
your health care coverage and prescription drugs. Joining a Medicare
Advantage Plan you will no longer need a Medigap policy. The Medigap policy
doesn’t pay any co-payments or deductibles under the Medicare Advantage
Plan. In the event that you discontinue your Medigap policy after joining a
Medicare Advantage Plan, you will not be able to get your Medigap drug
coverage back later.

3. Keep Medigap policy with prescription drug coverage.

Choosing this option means doing nothing at all. However, joining a Medicare prescription drug plan later may mean paying a late enrollment penalty. Again, no new Medigap policies with prescription drug coverage can be sold.

4. Check with your state department of insurance on other options.

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