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Easy Guide to Choosing a Medigap Policy

Medigap insurance plans (or medicare supplemental plans) are sold by private companies to fill-in gaps in Medicare coverage. These are 12 standard Medigap plans, each with different coverage. The plans are labeled A-L. The types of plans offered are organized differently in Massachusetts, Minnesota, and Wisconsin. You can only use a Medigap plan with Original Medicare. You cannot use such a plan with a Medicare Advantage Plan.

If you have a Medigap policy you may want to consider getting rid of that plan for a variety of reasons. Not least of these reasons is prescription drug coverage. New Medigap policies with prescription coverage cannot be sold but some may still have such policies with drug coverage. If you have a policy that has already been issued you are allowed to keep that policy. Even so, Medicare drug coverage, be it through Original Medicare or a Medicare Advantage Plan, may be a better option. Also, prescription drug plans can be either covered by Medicare policies or a Medigap policy but not both. There are many different situations related to your coverage that might arise when you have (or if you are thinking about signing up) for a Medigap policy. If you have a Medigap policy with drug coverage and are thinking about keeping it you should be aware of how Medigap relates to your Medicare coverage.

For instance, if you have Original Medicare and a Medigap policy with no drug coverage and you use prescriptions, you should either look into getting a Medicare Prescription Drug Plan with Original Medicare or get coverage through a Medicare Advantage plan. Usually Medicare prescription drug coverage is best. Such coverage provides savings over your drug copayments through a Medigap plan. Another option to consider is that Medicare prescription drug plans provide better coverage should you suddenly require more prescription drugs.

If you have a Medigap policy with prescription drug coverage you should compare that coverage with Medicare plans offering prescription drug coverage. You may have already received information from plans in your area. Compare these and others to your current coverage.

In most cases, the bulk of your costs will be paid by the various Medicare prescription drug plans. This is generally not going to be the case with Medigap coverage. People of different ages and medical conditions will be better served by different plans. Medigap plans are less likely to meet your medical needs if you start taking more prescription drugs, but there is another issue to consider. If you do not become part of a Medicare Part D plan or a Medicare Advantage Plan (with prescription coverage) when you first become eligible to do so, you may pay a late enrollment penalty. This penalty usually relates to you having ongoing, creditable prescription drug coverage. The penalty is not a one-time payment and is applied as an ongoing increase in your premium.

If you decide to get your prescription drug coverage through Medicare, inform your insurance company and any drug coverage in your Medigap policy will be removed from that plan. You should pay a lower premium when the coverage is removed.

You cannot purchase a new Medigap plan with prescription drug coverage. If a company suggests otherwise you should be cautious. If, however, you already have a Medigap plan with drug coverage, you can keep it. You may want to look over that policy and compare it to Medicare drug plans. A Medigap plan may actually cover less and cost more. Another issue has to do with “creditable coverage.” As mentioned earlier, if you do not have creditable coverage and you do not get Medicare prescription drug coverage when first eligible, you may be charged a late enrollment fee. Most Medigap coverage is not considered creditable.

All of the twelve plans now cover what are referred to as “basic benefits.” None of these basic benefits are related to prescription drug coverage. You can search for plans offered in your area on the Medicare website. Each lettered plan is identical wherever sold (except in Massachusetts, Minnesota, and Wisconsin) and offers the same benefits. These supplemental plans vary in cost by lettered plan and area. You need to examine your medical needs carefully before deciding to purchase a Medigap policy.

Remember, if you have limited income there are policies that can assist you with prescription drugs and will likely be cheaper than any existing Medigap policy. There is help through Medicaid, low income assistance programs, and various pharmaceutical assistance programs. Some of these are offered by your state based on age, income, or medical condition. Pharmaceutical companies also have programs to help those with limited means.

Medigap plans currently offered will change in June 2011. So it is best to get a plan that suits you now.

The plans offered in the three states that do not use the “A-L” standardized plans are each unique. The best way to find out which plan is for you is to check with the Massachusetts, Minnesota, or Wisconsin state websites. In all three states the plans closely mirror the plans offered in other states. But there may be fewer plans. Drug coverage is not covered in new plans issued in these three states either.

Medigap plans may be useful for supplementing your Medicare coverage. They are not, however, being sold with drug coverage. Even if you have a Medigap plan that has drug coverage and you choose to keep that plan, look at your other benefits carefully to be sure that keeping the old Medigap policy is to your advantage.

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