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What You Need to Know About Medigap & Medicare Drug Coverage

Updated: Dec 27, 2022

Prescription drug coverage is an important part of health insurance, especially for kupuna. In addition to figuring out which plans are best suited to your needs, it’s important to know when to sign up and what types of plans work together.


When it comes to Medicare drug coverage, there are many rules to understand. Today we’re going to talk about standalone Medicare drug coverage (Part D) versus drug coverage under a Medigap plan (also called Medicare Supplement plans), which is relevant to kupuna who enrolled in a supplement plan before 2006 when some plans covered prescription drugs. Please contact your Medicare agent with any specific questions about your prescription drug coverage; we are here to help!

What You Need to Know About Medigap & Medicare Drug Coverage


1. You can’t have both


The first thing you need to know about Medigap and Medicare drug coverage is that you can't join a Medicare Prescription Drug Plan and have a Medigap policy with drug coverage at the same time. It’s one or the other. If you have a Medigap policy that covers prescription drugs, you will need to tell your Medigap insurance company if you join a Medicare Prescription Drug Plan. The Medigap insurance company will then remove the prescription drug coverage from your Medigap policy and adjust your premium.


It’s important to know that once the drug coverage is removed from your Medicare supplement plan, you can never get that coverage back because Medigap plans are no longer sold with coverage for prescription drugs.


2. One insurance company may offer Medigap policies and Medicare drug plans


One insurance company may offer both Medigap and Medicare drug plans. If you are signed up for a Medigap plan (with prescription drug coverage) and a standalone Part D plan with the same company, you may be billed for two separate monthly premiums. If you are unsure of what you are being billed for, contact your insurance company or your trusted Medicare agent.


3. Keep notices about creditable coverage sent by your Medigap insurer


Your Medigap insurer is legally obligated to send you a notice every year telling you if the prescription drug coverage in your Medigap policy is creditable* and if the drug coverage in your Medigap policy has changed so that it is no longer creditable.


Keep these notices in case you decide to join a Medicare drug plan down the road. These notices may be required to help you avoid a late enrollment penalty.


*Creditable prescription drug coverage, or “creditable coverage”, is prescription drug coverage that on average pays at least as much as Medicare’s standard prescription drug coverage. In order to avoid a Late Enrollment Penalty (LEP), seniors must have creditable drug coverage or Medicare coverage.


4. When you can join a Medicare Prescription Drug Plan if you have creditable drug coverage


If you have a Medigap policy with creditable drug coverage, you can only join a Medicare Prescription Drug Plan during the Annual Enrollment Period (AEP), which runs between October 15–December 7 each year. The exception to this rule is if you lose your Medigap policy through no fault of your own. If this happens, you will be able to join a Medicare drug plan when you lose your Medigap policy.


5. When you can join a Medicare Prescription Drug Plan if you do not have creditable drug coverage

If you have a Medicare Supplement plan that does not have creditable drug coverage, you may have to pay a late enrollment penalty if you decide to sign up for a Medicare Prescription Drug Plan later. If you are assessed a Part D late enrollment penalty, you will pay a higher monthly premium than if you had joined a prescription drug plan when you were first eligible. Not only does the penalty increase for each month that you were eligible for Medicare prescription drug coverage but didn’t sign up, you will be stuck with the penalty for as long as you have a Medicare drug plan (in most cases). Learn more about the Medicare Part D late enrollment penalty here.


Contact a PBC Agent for Help


Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.


At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.

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