Since its introduction in 2010, the Medigap Plan N has steadily grown in popularity. The lower premium and option to still go to the doctor of your choice without network limitations makes it a great alternative to restrictive Medicare Advantage plans. And now with the huge changes to Plan F and Plan G as a result of the Medicare Acces and CHIP Reauthorization Act (MACRA) law going into effect on January 1, 2020, the Plan N is now the best Medicare supplement plan for your long-term financial goals. We look at the reasons why in this article.
Medicare Guaranteed Issue Plans 2020 and Beyond
We mentioned above that MACRA was making big changes to the Plan F. Since the beginning of the Medicare lettered, standardized plans in 1991, the Plan F has far outsold all the other plans combined. It covered every deductible and co-payment under original Medicare.
But starting in 2020, the Plan F will no longer be available to people who are new to Medicare. If you have a Plan F, I would highly recommend that you look for a different plan if you are able to qualify to change. If you are not sure, call us and we can help you see if you can make a change. Since there are will be no new, healthy enrollees coming into Plan F, we expect that Plan F rates will rise just as other discontinued plans have in the past.
Another way that MACRA is affecting Medicare coverage is in how it handles Guaranteed Issue enrollees. Those enrollees starting in 2020 will have a choice of Medigap Plan D, Plan G, or the new High Deductible Plan G.
Guaranteed Issue enrollees are generally people who are losing creditable coverage through an employer. It also includes certain people who are moving out of a Medicare Advantage plan’s coverage area or whose Medicare Advantage plan is being discontinued. These enrollees are eligible to enroll in certain Medigap plans with no underwriting. Until 2020 brought new changes, they could enroll in Medigap Plan A, B, C, F, K, or L.
When a person qualifies for a Guaranteed Issue plan, they are not limited to Plan D, G, or HDG. They can actually go to any plan they want to – if they qualify for that plan through underwriting. If they are not medically qualified to go with the plan of their choice, they are limited to Plan D, G, and HDG for guaranteed acceptance, as I mentioned. That means that – just as it was with the Plan F under the old Guaranteed Issue rules – the Plan G will be taking on enrollees who are sicker or have pre-existing conditions. This will lead to higher claims for Plan G across the board, which in turn leads to higher premiums.
Since those in Guaranteed Issue situations will not be able to enroll in Plan N unless they are healthy, many Medicare experts feel the rates for Plan N vs Plan G will have a large gap between them just as the Plan G vs Plan F had before.
Coverage Under Medigap Plan N
So the big question becomes – how is Medigap Plan N different from Plan G or Plan F? Here is a chart from the official Medicare and You booklet that shows the coverage of each lettered plan:
There are three primary coverages that Plan N does not offer compared to Plan F or Plan G:
- Like Plan G, the Medigap Plan N does not cover the Part B deductible
- You may have an office visit co-payment of up to $20 per visit and a $50 co-payment for emergency room visits that do not result in a hospital admission
- Plan N does not cover excess charges
Medicare supplement Plan N does not cover the Part B deductible. In 2019, that deductible is $185. After you meet your Part B deductible, Medicare covers 80% of Part B covered charges and the Plan N covers the other 20% for you.
You will be responsible for an office visit co-payment of up to $20 per office visit to a physician. This co-payment does not apply to physical therapy or occupational therapy visits, as well as some other visits.
There is also a $50 co-payment for emergency room visits. If you are admitted to the hospital as a result of this ER visit, all charges are moved to coverage under Part A and are not subject to the $50 co-payment. If you are treated and released from the ER, the $50 will be due to the hospital.
Medigap Plan N Does Not Cover Excess Charges
Not covering Excess Charges really is not as bad as it sounds. Medicare has assigned prices for any procedure that a physician performs on your behalf. Every procedure has a Medicare code and a price that Medicare approves for that procedure or visit. If your doctor accepts “Medicare Assignment,” or in other words the assigned price, they will accept the predetermined amount from Medicare as payment in full.
Less than 4% of doctors choose to not accept Medicare Assignment. When they do not accept this payment, they can charge the patient 15% more than the Medicare-assigned price for that procedure. That extra amount is the excess charge. One way to avoid any excess charges is to ask your doctor if they accept Medicare assignment.
**There are some states that do not allow any excess charges to be billed to the Medicare beneficiary. As of 2017, these states include Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you live in one of these states, you can enroll in a Plan N without any concern about having to pay excess charges.
Here is a report about excess charges from one of the largest Medicare insurers:
In August 2016, Aetna reported that 99.34% of the claims they process have no excess charges. Of the 0.66% of claims that do have Medicare excess charges, the average amount of the charge is less than $20.
Medigap Plan G Rates Will Rise
As I write this article in the summer of 2019, we are already seeing some larger than normal increases in Plan G premiums this year. Many experts believe this is in preparation for the incoming Guaranteed Issue enrollees who will cause Plan G plans to have a sicker pool of covered people than it has in the past. Over the last few years, we have seen an average annual rate increase across all companies on the Plan G of 4%. Already this month, I have received four notices for Plan G rate increases. The last two from different companies were 9.9% and 12% in certain states, respectively.
Because of the reasons outlined in this article, my office will no longer be recommending Plan G for most applicants. There may be a few situations where someone goes to the doctor often and the co-payments would be cost-prohibitive. For those we would likely recommend the Plan G. But the overwhelming majority of our recommendation will be for Plan N.
To see what would be the best option for your personal situation, call us at 1-888-228-6119 or use the form to send a request.
Keith Murray is an independent agent and the founder of Integrity Senior Solutions Inc. He has been working with Seniors to meet their insurance and financial needs since 1996.