stand-alone prescription drug coverage

In most cases, stand-alone prescription drug coverage refers to Medicare Part D plans that Medicare beneficiaries purchase to supplement Original Medicare (or to supplement a Medicare Advantage plan that doesn’t already come with built-in Part D coverage, but 90 percent of Medicare Advantage plans do include Part D coverage). The plans are called “stand-alone” because they’re purchased on their own, separate from the rest of the person’s health coverage; it’s common for an Original Medicare beneficiary to have a Part D plan from one insurer and a Medigap plan from a different insurer.

You might also hear someone refer to stand-alone prescription drug coverage for people who aren’t enrolled in Medicare, although that’s much less common. It’s possible, however, to obtain stand-alone drug plans in the non-Medicare market, although they’re usually prescription discount plans rather than insurance (here’s an explanation of how that works).

Under the Affordable Care Act, all individual and small group health plans effective in 2014 or later include prescription drug coverage as an essential health benefit, so there’s no need for a stand-alone drug plan if you have an ACA-compliant individual or small group plan (grandfathered and grandmothered plans can still exist without drug coverage). And although large group plans are not required to cover prescription drugs, nearly all of them do. States are not required to include prescription drug coverage in their Medicaid plans, but all of them currently do.

So Original Medicare is the only major type of health coverage that doesn’t include prescription drug coverage, requiring enrollees to purchase supplemental stand-alone drug coverage. Medicare Part D is true insurance, but in most other cases, if people are buying stand-alone drug coverage, they may be getting a prescription discount program rather than an actual insurance plan.