Case Flash:  Switching Prescription Coverage From a Medigap Plan to Part D

Mr. S has had Original Medicare Parts A and B since 2005. He has also had a Medicare supplemental plan with drug coverage, Medigap Plan H. Medigap Plan H (along with Plans I and J) with drug coverage has not been sold since January 1, 2006, when the Medicare drug benefit (Part D) began. However, people like Mr. S, who bought one of these Medigap plans with prescription drug coverage before that time, can keep the Medigap’s drug coverage.

In the past year, Mr. S’s overall health has declined. As a result, his prescription drug costs have gone up, but Mr. S’s Medigap plan only pays up to a certain amount each year for his drugs, leaving him paying a high price out-of-pocket for the medications he needs. Mr. S began looking for other options to get more comprehensive coverage for his prescription needs. He decided that he would prefer to enroll in a Medicare Part D plan for his prescription drug coverage.

In August Mr. S called the Medicare Rights Center for help choosing a Medicare Part D plan. The Medicare Rights Center hotline counselor told Mr. S that he would have to wait until the Annual Coordinated Election Period (ACEP) to switch plans; the ACEP runs from November 15 th to December 31 st. For people who sign up for a Part D plan during the ACEP, Part D coverage becomes effective on January 1 st.

The hotline counselor went on to warn Mr. S that he would likely have to pay a Part D premium penalty when he enrolled in a drug plan because Medigap Plan H drug coverage is not considered “creditable coverage”—coverage that is as good as or better than the Medicare drug benefit. In most cases, people with Medicare who do not enroll in Part D when they are first eligible and do not have creditable coverage have to pay a premium penalty for enrolling late. People who qualify for Extra Help—a federal program that helps pay for Part D costs—can avoid this penalty regardless of when they enroll. Since Mr. S had income too high to qualify for Extra Help, he would have to pay a premium penalty in addition to his monthly premium for as long as he remained enrolled in Medicare Part D. Since Mr. S could have enrolled in a Medicare drug plan in the spring of 2006 when the first Part D enrollment period ended, he would have to pay a premium penalty that would be calculated based on the number of months that he delayed enrollment in Part D.

Mr. S decided that even with the premium penalty, it would be a better idea for him to choose a prescription drug plan that provided him better coverage than to stick with his Medigap plan with prescription drug coverage. The longer Mr. S waited to enroll in Part D, the greater his premium penalty would be. Together, Mr. S and the hotline counselor used the Prescription Drug Plan Finder on Medicare.gov and searched for different Part D plans that covered Mr. S’s medications without restrictions at the lowest cost.

The hotline counselor also mentioned that Mr. S has the option of enrolling in a Medicare private health plan with prescription drug coverage, but Mr. S told the hotline counselor that he wanted to stay in Original Medicare because he would be able to continue to see the same doctors. If Mr. S wanted to keep the health benefits of his Medigap Plan H, Mr. S could enroll in a Part D plan and then call his Medigap plan to request that they drop him from the prescription drug component of the plan and adjust his monthly Medigap premium so that he is no longer paying a prescription drug premium to his Medigap plan.

-From: “ Case Flash: Switching Prescription Coverage From a Medigap Plan to Part D” Medicare Watch, a biweekly electronic newsletter of the Medicare Rights Center, Vol. 11 , No. 21 : October 14, 2008.

10/08