01:00 AM EST on Tuesday, November 22, 2005

You're trying to help your parents decide whether to pick one of the new prescription drug plans under Medicare. But what if your parents also have a Medigap plan -- how does that fit in? That's what a woman from Lincoln asked MoneyLine:

Q: About the Medicare prescription plan: My folks have Medicare and they also have [a Medigap plan] and I intend to sign them both up. But I would think that with that type of [Medigap] insurance, that it does have a prescription plan attached to it, and there's really no need [for a drug plan under Medicare Part D] and it's all redundant. . . .

-- S.H., Lincoln

A: Not necessarily.

Your parents' Medigap plan may not have prescription drug coverage. If that's the case, think about keeping the Medigap plan, but enrolling them in one of the new Medicare prescription drug plans, too.

What if your parents' Medigap plan does have prescription drug coverage? Consider dropping that plan and signing them up for a less comprehensive Medigap plan -- plus a Medicare prescription drug plan.

That's the short answer; following are some details:

Your parents are enrolled in the standard, or traditional, form of Medicare. Let's call it basic Medicare. It's the federal health insurance program that generally covers people 65 and older and the disabled.

Your parents also have an insurance plan -- a Medigap plan -- that serves as a supplement to Medicare. (Medigap plans aren't part of Medicare; they're offered by insurance companies and you pay for them separately.)

It's called Medigap because it fills in some of the gaps in traditional Medicare. So when your parents go to a doctor or hospital, Medicare pays its share, then the Medigap policy kicks in. (A Medigap plan may pay for certain out-of-pocket costs, and perhaps cover some benefits, that Medicare does not, according to the Medicare handbook, "Medicare & You.")

But few Medigap plans cover prescription drugs, said Deane Beebe, communications director of the Medicare Rights Center, an independent, nonprofit consumer group.

For those that do, premiums may be high and drug coverage limited, she said. "We have never thought that [Medigap] drug coverage was good value" for the money, Beebe said in a telephone interview from the group's headquarters in New York.

So as a first step, check to see whether your parents' Medigap plan has prescription drug coverage, said Dr. Charlotte S. Yeh, regional administrator of the Centers for Medicare & Medicaid Services, part of the U.S. Department of Health & Human Services.

What then? Here's the deal:

No Coverage: If your parents' Medigap plan does not cover prescription drugs, they may want to stick with their Medigap plan -- but you should strongly consider also enrolling them in one of the new Medicare prescription drug plans.

The Medicare program says that for someone with traditional Medicare, the new plans will, on average, pay for half of that person's drug costs next year.

Keep in mind that prices and terms vary by plan, so you'll have to shop around. Nationwide, the average premium is about $32 a month. In Rhode Island, the least expensive plan is $7.32 a month -- about $88 a year.

Some Coverage: If your parents' Medigap plan does cover prescription drugs, you need to find out if the drug coverage is at least as good as they could get under a new Medicare prescription drug plan.

(Your parents' Medigap plan may have already advised them about this. If not, or if they can't find a record of that communication, contact the plan yourself.)

If their Medigap plan's drug coverage is at least as good as a new Medicare drug plan would offer, they can stick with it, Yeh said.

However, "Most Medigap drug coverage that currently exists will not be" as least as good as that of a new Medicare prescription drug plan, Yeh said in an interview at the agency's regional headquarters in Boston.

In other words, Medigap plans with a prescription drug feature generally don't provide as much coverage as the new Medicare prescription drug plans do.

The "Medicare & You" handbook puts it this way: "You will generally save money and get better coverage with the new Medicare prescription drug coverage than with your current [Medigap] drug coverage." One reason: "Medicare coverage will never run out if you have high drug costs," the handbook says.

If that's the case for your parents, Beebe recommends two things:

Drop the Medigap plan they now have and enroll in a Medigap plan that does not cover prescription drugs.

Obtain prescription drug coverage for your parents by signing them up for one of the new Medicare prescription drug plans.

As a result, your parents would have two plans to supplement their basic Medicare coverage: a Medigap plan and a Medicare prescription drug plan.

A few other quick points:

Medigap plans with prescription drug coverage will no longer be sold after Jan. 1, 2006, Beebe said.

If your parents' Medigap plan has a prescription drug feature, check with the plan to find out more details about its drug coverage and what options the insurer may have for those who are considering dropping it.

Keep in mind that although the new Medicare prescription drug plans collectively are sometimes referred to as Medicare Part D, they are separate insurance plans that Medicare helps to pay for. Your parents may have to pay for part of it, too.

Enrollment, which is voluntary, began Nov. 15 and continues to May 15. If you sign up by Dec. 31, coverage will kick in on Jan. 1. If you sign up early next year, coverage will kick in the following month.

In general, lower-income people may qualify for special help to pay for a Medicare prescription drug plan.

There are other options besides those listed here. For instance, instead of having your parents involved in a number of different plans or programs -- traditional Medicare, Medigap and a Medicare prescription drug plan -- you could check out the benefits and drawbacks of Medicare Advantage plans, also known as Medicare HMOs or Medicare PPOs.

These plans generally offer all your Medicare-covered health coverage under one umbrella -- a single plan. Depending on the plan, you may be encouraged or required to use only certain doctors, hospitals and other services. Prescription drug coverage may also be included, but there may be limits -- on what pharmacies you may use, for instance.

TODAY'S TIP: When I first wrote about Medicare prescription drug plans in early October, I recommended that you take a look at the "Medicare & You" handbook, the one the Medicare program sent in the mail.

I still strongly recommend it. One reason: It includes examples for people in different circumstances, and explains their options in plain language.

I also strongly recommend the Medicare Rights group Web site, which has a ton of detailed material about the pluses and minuses of basic Medicare and of the new Medicare prescription drug feature:

www.medicarerights.org

The Medicare program also offers information at its toll-free phone line, 1-800-633-4227, and has information and tools on its Web site to help you understand the prescription drug feature and sort through the available plans:

www.medicare.gov

Remember, though, that no newspaper article, radio program, TV show or Web site is a substitute for one-on-one counseling from a professional who can help you decide which plan is best for you based on your particular circumstances. So be sure to check with your local Senior Health Insurance Program. In Rhode Island, call (401) 462-3000.

If you're trying to pick a Medigap plan, start with the Medicare booklet, "Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare," Publication No. 02110. To order a free copy, call Medicare's toll-free phone line or use the Medicare Web site listed above.

Neil Downing is a Journal staff writer and author of The New IRAs and How to Make Them Work for You. Questions about your money matters? Call us at 1-401-277-7484 and leave a message, or e-mail:

moneyline@projo.com

Sorry, no personal replies; as many questions and issues as possible will appear here.