Medigap Insurance Policy - How Part D Changed Supplemental Plans

A Medigap insurance policy is designed specifically to provide coverage for Medicare beneficiaries who need assistance paying for areas that are not addressed in the original Medicare program. Each plan addresses the same core benefits plus additional features that make it unique.

These combinations of benefits provide many options for today’s senior citizens. The plans enable policyholders to select the levels of coverage in the areas they need the most. Although there are 12 different plans, prescription drug coverage was removed from all of them in 2006. This is because it became its own core area of coverage.

Medicare Part D, not to be confused with supplemental Plan D, is focused on providing drug coverage for program participants. If beneficiaries had a plan with limited drug coverage when they first enrolled in Medicare and want to sign up for Part D, they cannot keep the drug coverage in their Medigap insurance policy.

There are two ways for Medicare beneficiaries to get prescription drug coverage. Medicare Prescription Drug plans, sometimes known as PDP’s, add coverage to the original Medicare plan. They may also add coverage for some Medicare Cost Plans, Private Fee-for Service Plans and the program’s Medical Savings Account Plans.

The Medicare Advantage Plans operate like an HMO or a PPO. They include prescription drug coverage as well as coverage for Part A and B. If you have one of these plans, a Medigap insurance policy will not add coverage. It is illegal for an insurance provider to sell you a supplemental plan if you already have an Advantage Plan.

A Medical Savings Account (MSA) Plan is a type of Medicare Advantage plan. It has two parts. The first part includes a high-deductible health plan, similar to supplemental Plan F and Plan J. This means it will not pay for expenses until the deductible has been met.

The second part is a Medical Savings Account. Medicare deposits money into this account that you can use for health care expenses. They can include medical equipment that has not been covered by Part B benefits, eyeglasses, hearing aids or prescription drug costs.

It is similar to a standard Health Savings Account (HSA). Although a Medigap insurance policy can help provide coverage where the original plan does not, it can no longer include coverage for prescription drugs. When the Medicare decided to offer it as an option to all beneficiaries, it precluded its addition to new supplemental plans.