Medigap & Medicare Drug Coverage (Part D): An Overview

Medigap & Medicare Drug Coverage (Part D): An Overview

Medicare is a federal health insurance program that covers millions of Americans who are 65 or older, disabled, or have certain health conditions. Medicare has four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage plans), and Part D (prescription drug coverage).

However, Medicare does not cover everything. You may still have to pay some out-of-pocket costs for deductibles, coinsurance, copayments, and excess charges. That’s where Medigap comes in.

What is Medigap?

Medigap is a type of supplemental insurance that helps pay for some of the costs that Medicare does not cover. Medigap policies are sold by private insurance companies and are standardized by the government. There are 10 different Medigap plans available in most states, each with a different level of coverage. They are labeled with letters from A to N.

Medigap plans only work with Original Medicare (Part A and Part B). They do not work with Medicare Advantage plans (Part C). If you have a Medicare Advantage plan, you cannot buy a Medigap policy. You can only switch to a Medigap policy if you return to Original Medicare.

What is Medigap Plan D?

Medigap Plan D is one of the 10 standardized Medigap plans. It covers the following benefits:

  • Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up.
  • Part A deductible.
  • Part A hospice care coinsurance or copayment.
  • Part B coinsurance or copayment.
  • Skilled nursing facility care coinsurance.
  • Blood transfusion (first three pints).
  • Medically necessary emergency health care service for the first 60 days when traveling outside the U.S. Deductible and limitations apply.

Medigap Plan D does not cover the following benefits:

  • Part B deductible.
  • Part B excess charges (if a provider is permitted to charge more than Medicare’s approved amount and does so).
  • Prescription drugs.
  • Long-term care (like non-skilled care you get in a nursing home).
  • Dental care.
  • Vision care.
  • Private-duty nursing.

How much does Medigap Plan D cost?

The cost of Medigap Plan D varies depending on several factors, such as your age, location, tobacco use, and the insurance company you choose. You will have to pay a monthly premium for your Medigap policy in addition to your Part B premium.

The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period, which starts when you are 65 or older and enrolled in Part B. During this period, you can buy any Medigap policy you want without any medical underwriting or waiting periods. You cannot be denied coverage or charged more because of your health status or pre-existing conditions.

After your open enrollment period ends, you may not be able to buy a Medigap policy or you may have to pay more for it. You may also have to answer health questions or wait for coverage of pre-existing conditions.

How does Medigap Plan D work with Medicare drug coverage (Part D)?

Medicare drug coverage (Part D) is a separate program that helps pay for prescription drugs that you fill at the pharmacy to take home. You can get Part D coverage through either a stand-alone prescription drug plan (PDP) or a Medicare Advantage plan that includes drug coverage (MA-PD).

Medigap plans sold after 2005 do not include prescription drug coverage. So, if you enroll in Medigap Plan D for the first time, it will not include drug coverage. If you want prescription drug coverage, you will have to join a separate Part D plan.

If you already have a Medigap policy that includes prescription drug coverage, you will have to make some decisions about how you want to get your drug coverage in the future. Under a new federal law, new Medicare prescription drug coverage will be available to all people with Medicare starting in 2006. The new law also requires certain changes to Medigap policies with prescription drug coverage.

Your Medigap insurance company will mail you a notice sometime between September 15 and November 15, 2005, to tell you if your Medigap policy’s prescription drug benefit will or will not, on average, pay out in benefits at least as much as a standard Medicare prescription drug plan will pay out. This is called “creditable coverage”.

If your Medigap policy has creditable coverage, you can keep it and not join a Part D plan. However, you may still want to compare your options and see if enrolling in a Part D plan will save you money or give you better coverage.

If your Medigap policy does not have creditable coverage, and you have no other coverage that does, you will have to pay a penalty for a Part D plan if you decide to enroll at any time after May 15, 2006. Your premium will go up at least 1% per month for each month that you could have enrolled but didn’t.

You can also choose to drop your Medigap policy’s prescription drug coverage and join a Part D plan instead. In most cases, this will save you money and give you better coverage. However, once you drop your Medigap policy’s drug coverage, you cannot get it back.


Medicare and Medigap are two important programs that can help you pay for your healthcare costs as you age. However, they do not cover everything. You may still need additional coverage for prescription drugs and other services.

Medigap Plan D is one of the options that can help fill some of the gaps in Original Medicare coverage. It covers some deductibles, coinsurance, copayments, and emergency care abroad. It does not cover excess charges, prescription drugs, or other benefits.

If you want prescription drug coverage, you will have to join a separate Part D plan. You should compare different plans and see which one best suits your needs and budget.

For more information on Medicare coverage, contact us at Medicare Advisors. Tell us your needs, and we will set you up with the right healthcare plan.