by Russell Noga | Updated December 14th, 2023
Original Medicare Parts A & B only cover 80% of your inpatient and outpatient medical expenses. To help cover expenses, may people enroll in a Medigap plan.
These plans are available in ten options, A, B, C, D, F, G, K, L, M, & N. Each has a varying level of coverage.
Unfortunately, Original Medicare Parts A & B, and all Medigap plans, don’t cover the cost of your prescriptions.
However, you can sign up for a separate Medicare Prescription Part D plan, giving you coverage for your medication requirements, for a nominal monthly fee.
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What Medicare Expenses Does Medigap Cover?
Medigap plans cover the out-of-pocket costs associated with the expenses not fully covered by Original Medicare Part A (hospital) and Part B (medical). Some Medigap plans offer more coverage than others. The price points for these plans also vary, with the more comprehensive options having higher monthly premiums.
All Medigap plans offer the following benefits.
- Part A coinsurance and hospital costs for up to 365 days after using Medicare benefits.
- Part A hospice care coinsurance or copayment.
- Part B coinsurance or copayment.
- Blood transfusion costs for the first three pints of blood.
Plans F*, G, and N offer additional Medicare Parts A & B benefits.
- Part A deductible.
- Part B excess charges (Plan N doesn’t cover these charges).
- Skilled nursing facility care coinsurance.
- 80% of emergency healthcare costs when traveling outside the US for 60 days. ($250 deductible and $50,000 maximum apply).
- Unlimited coverage for all out-of-pocket costs.
Plans C & F are no longer available for seniors eligible for Medicare after January 1, 2020. Changes made by the CMS stipulate that no Medigap plan can offer coverage for the Part B deductible. However, if you qualified for Medicare before the cut-off date, you can still apply for Plan F.
Does Any Medigap Plan Cover Drugs?
Unfortunately, no Medigap plan covers prescription drug costs. Medigap only covers the out-of-pocket costs left behind by Original Medicare Parts A & B. These policies don’t offer any coverage for prescription drugs. As a result, no Medigap plan supports drug-related expenses.
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How Do I Get Drug Coverage If I Have a Medigap Plan?
If you need coverage for your prescription medications, you’ll need to enroll in Medicare Part D. Don’t confuse this with Medigap Plan D; they are two different policies. Let’s look at what Part D covers and how you can leverage its benefits to get coverage for your monthly prescriptions.
Medicare Part D offers beneficiaries an outpatient prescription drug benefit. Part D is available through the same private healthcare insurers providing Medigap plans. Beneficiaries can enroll in a stand-alone prescription drug plan (PDP) to supplement Original Medicare Parts A & B or as part of their Medigap or Medicare Advantage plans.
In 2022, 49 million Medicare beneficiaries will have a Part D plan to support their Medicare Parts A & B policies. There are 801 PDPs offered across 34 PDP regions in the United States in 2023.
Medicare Part D Phases
The Part D standard benefit comes in several phases. These include an initial coverage phase, a coverage gap phase, a catastrophic coverage phase, and a deductible. There is no hard cap on out-of-pocket spending with Part D policies.
In 2023, parameters for the standard benefit increase. That means Part B beneficiaries face higher out-of-pocket expenses for deductibles and initial coverage phases than in prior years. They’ll also need to pay more out-of-pocket before qualifying for catastrophic coverage. Some of the notable changes to Part D policy standards include the following.
- The standard deductible increased from $480 to $505 in 2023.
- The initial coverage limit increased from $4,430 to $4,660.
- The out-of-pocket spending limit increased from $7,050 to $7,400.
For expenses in the coverage gap phase, Part D beneficiaries pay 25% for generic and brand-name drugs. Manufacturers provide a 70% discount on brands, with plans paying the balance of 5% of brand drug costs and the remaining 75% of the cost of generic drugs.
Medicare pays 80% of total drug costs over the catastrophic limit. Plans pay 15%, and beneficiaries pay 5% of total drug costs or $10.35/$4.15 for each brand name and generic drug, respectively.
The Inflation Reduction Act introduced changes to Part D in 2023, including limiting the price of insulin to $35 per month and making vaccines free for beneficiaries. The Act also places a hard cap on Part D out-of-pocket medication spending by removing the 5% coinsurance for catastrophic coverage in 2024. It also caps out-of-pocket expenditure to $2,000 in 2025.
What Does Part D Cost?
As mentioned, Part D is available from private healthcare insurers that sell Medigap products. The cost of a Part D plan can vary by state and insurer. So, what you pay for Part D in one state, might be lower or higher in another.
In 2023, the Part D base premium for beneficiaries is based on bids submitted by PDPs and MA-PDs. It is not weighted by the beneficiary’s enrollment. The base premium currently stands at $32.74. This amount is actually a decrease of 2% from the base premium price in 2022.
To give you an idea of the change in premium prices from state to state, in 2023, PDP monthly premiums ranged from a low of $1.60 in the Washington/Oregon region to a high of $201.10 in South Carolina. These figures are unweighted by plan enrollment.
However, the premiums can range in price between healthcare providers in each state, depending on the beneficiary’s risk profile. For instance, the average monthly premiums for Part D in Florida can range between $8.40 to $170.10.
Those Part D beneficiaries with higher monthly incomes exceeding $97,000 per individual and $194,000 per couple will pay an income-related premium surcharge. The surcharge can vary between $12.20 to $76.40 per month.
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Frequently Asked Questions
Does Medigap Cover Drugs?
No, Medigap plans (Medicare Supplement plans) do not cover prescription drugs. If you need prescription drug coverage, you will need to enroll in a separate Medicare Part D prescription drug plan.
Who is eligible for Medigap Plans?
To be eligible for Medigap plans, individuals must be enrolled in Medicare Part A and Part B. The best time to enroll is during the Medigap Open Enrollment Period, which lasts for six months and begins when you are 65 or older and enrolled in Medicare Part B. During this period, you have guaranteed issue rights, meaning insurance companies cannot deny you coverage or charge you more based on pre-existing conditions.
When can you enroll in Medigap Plans?
The Medigap Open Enrollment Period is the ideal time to enroll in a Medigap plan, as you have guaranteed access to coverage without medical underwriting. After this period, you can still enroll in Medigap plans, but insurers may consider your health status, and premiums could be higher.
What are the best Medicare Supplement plans?
The best Medicare Supplement plans for you depend on your individual healthcare needs and budget. Plan G and Plan N are popular choices due to their comprehensive coverage and competitive pricing.
What does Medicare Supplement Plan G cover?
Medicare Supplement Plan G covers most of the gaps in Original Medicare, including Part A and Part B coinsurance, hospice care coinsurance, and the first three pints of blood. It also covers skilled nursing facility care coinsurance, Part A deductible, and 80% of foreign travel emergency costs.
What does Medicare Supplement Plan N cover?
Medicare Supplement Plan N provides similar coverage to Plan G but requires beneficiaries to pay certain cost-sharing amounts, such as a copayment for doctor’s visits and emergency room visits. It does not cover the Part B excess charges.
What is the difference between Medicare Supplement Plans and Medicare Advantage?
Medicare Supplement plans work alongside Original Medicare and help pay for out-of-pocket expenses not covered by Medicare. Beneficiaries can see any healthcare provider that accepts Medicare.
Medicare Advantage plans, also known as Medicare Part C, are private health insurance plans that replace Original Medicare. They often include prescription drug coverage and may offer additional benefits like dental and vision. However, beneficiaries may need to use a network of providers and follow plan rules.
How does Medigap cover prescriptions?
As mentioned earlier, Medigap plans do not cover prescription drugs. Beneficiaries need to enroll in a standalone Medicare Part D plan to get prescription drug coverage. These plans are offered by private insurance companies approved by Medicare.
How to choose between Medigap Plans and Medicare Advantage?
When choosing between Medigap plans and Medicare Advantage, consider your healthcare needs, budget, preferred providers, and prescription drug coverage requirements. If you want more flexibility in provider choice and additional benefits, a Medicare Advantage plan might be a better fit. If you prefer the freedom to see any provider without referrals and want more predictable out-of-pocket costs, a Medigap plan could be a suitable option.
Can you have both Medigap and Medicare Part D (prescription drug coverage)?
Yes, you can have both Medigap and Medicare Part D coverage. Many beneficiaries choose this combination to get comprehensive coverage for their healthcare needs. Medigap covers certain out-of-pocket costs under Original Medicare, while Medicare Part D provides prescription drug coverage.
Reach Out to Us for Advice on Medigap and Part D
Call us for assistance if you need advice on Medigap plans and Original Medicare Part D. Our team of licensed agents offers you a free consultation on Medigap and Part D. We’ll recommend the best providers in your state and get you the lowest premiums on any plan.
Call our offices at 1-888-891-0229 or leave your contact details on our web form. We’ll have a Medigap professional get back to you to discuss your Medical and medication requirements.
Russell Noga is the CEO and Medicare editor of Medisupps.com. His 15 years of experience in the Medicare insurance market includes being a licensed Medicare insurance broker in all 50 states. He is frequently featured as a featured as a keynote Medicare event speaker, has authored hundreds of Medicare content pages, and hosts the very popular Medisupps.com Medicare Youtube channel. His expertise includes Medicare, Medigap insurance, Medicare Advantage plans, and Medicare Part D.