Medicare Supplement Insurance Plans and Medicare Prescription Drug Coverage
The different parts of Medicare
With Medicare, you generally have options as to how you can be covered. You may be able to get coverage from private insurance companies to go alongside coverage from the government to get the extent of coverage you want. Original Medicare is not “all in one“ coverage. Unlike some types of insurance where one single plan offers medical, hospital, and prescription drug coverage, Medicare is broken up into different parts that cover different aspects of health care.
Medicare has four parts: Part A, Part B, Part C, and Part D.
- Part A is hospital insurance and Part B is medical insurance. The government administers Medicare Part A and Part B (Original Medicare) and you are usually automatically enrolled when you turn 65.
- Medicare Part D is prescription drug coverage. Medicare-approved private insurance companies sell stand-alone Medicare Part D Prescription Drug Plans. You are not automatically enrolled in a Part D Prescription Drug Plan, and will have to shop for prescription drug coverage if you want this benefit. You can get this coverage either through a stand-alone Medicare Part D Prescription Drug Plan, or through a Medicare Advantage Prescription Drug plan.
- Medicare Part C, also called Medicare Advantage, combines the benefits and services of Medicare Part A and Part B and usually includes Part D, Medicare prescription drug coverage, as part of the plan. Under a Medicare Advantage plan, hospice care is covered under Original Part A instead of through the plan. Medicare Advantage plans are offered by private companies that contract with Medicare.
Medicare Supplement (Medigap) insurance plans, also offered by private companies, can work alongside Original Medicare to cover out-of-pocket costs such as copayments, coinsurance and deductibles. Medicare Supplement insurance plans sold today usually don’t cover prescription drugs, and you can’t use them with Medicare Advantage plans. A stand-alone Medicare Part D Prescription Drug Plan can work alongside your Original Medicare (Part A and Part B) benefits.
In summary, there are two main ways to get Medicare.
- You can stay with Original Medicare (Part A and Part B) and optionally add Part D (prescription drug coverage) and a Medicare Supplement insurance plan.
- OR you can get a Medicare Advantage plan, which combines Part A, Part B and usually Part D. You may be able to add prescription drug coverage if it is not already included.
Medicare Supplement insurance
Medicare Supplement insurance plans typically cover some or all of the following benefits: Medicare Part A coinsurance, Medicare Part B coinsurance, blood (first 3 pints), and hospice care coinsurance or copayments. Some Medicare Supplement plans may also cover skilled nursing facility care coinsurance, the Medicare Part A deductible, Medicare Part B excess charges, and limited foreign travel medical emergencies. Medicare Supplement insurance plans sold today do not cover prescription drugs.
You can generally get prescription drug coverage by enrolling in a Part D Prescription Drug Plan. If your Medicare Supplement insurance plan does cover prescription drugs and you want to enroll in separate Medicare prescription drug plan, you will need to tell your Medicare Supplement insurance company so they can remove the prescription drug coverage from your policy and adjust your premium. Under Medicare rules, you cannot enroll in more than one Prescription Drug Plan.
Late enrollment in prescription drug coverage and Medicare Advantage plans
If you miss your Medicare Initial Enrollment Period and you don’t have “creditable coverage“ for prescription drugs, you may have to pay a late-enrollment penalty when you enroll in Medicare Part D. For most people, the Medicare Initial Enrollment Period is a 7-month period that starts 3 months before you turn 65, includes the month you turn 65, and ends 3 months after you turn 65.
If you go for a continuous period of 63 days or more without a Medicare Prescription Drug Plan (Part D), a Medicare Advantage Prescription Drug plan with drug coverage, another Medicare health plan that offers prescription drug coverage, or creditable prescription coverage such as from an employer or union, you may owe a late-enrollment penalty. The late-enrollment penalty is 1% of the national base beneficiary premium times the number of full uncovered months that you didn’t have Part D or creditable coverage. The longer you wait to enroll, the higher the penalty may become.
If you have a Medicare Supplement insurance plan with Original Medicare but have decided that you would prefer to have a Medicare Advantage plan, you can apply for a Medicare Advantage plan, but you won’t be able to use your Medicare Supplement insurance plan to cover any coinsurance, copayments or deductibles. The benefit of the Medicare Advantage plan could be that it covers your Part A and Part B benefits (besides hospice care, which is covered under Medicare Part A) as well as your Medicare Part D prescription drug coverage, in most cases.
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