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 keeping up with a network 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 Access and CHIP Reauthorization Act (MACRA) law going into effect on January 1, 2020, Plan N is now the best Medicare supplement plan for your money.
Changes to Medicare Guaranteed Issue Plans
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 after January 1,2020. 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. 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.
When a person qualifies for a Guaranteed Issue plan, they are limited to Plan D, G, or HDG unless they can qualify for another plan like Plan N through underwriting. If they are not medically qualified to go with the plan of their choice, then 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 more enrollees who are sicker or have pre-existing conditions. A sicker pool of policyholders leads to higher claims. Higher claims lead to higher premiums. Even though you cannot be singled out for a rate increase, those sicker people on your plan can lead to higher rate increases that will affect you, too.
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.
Watch this video to see the Plan N in detail:
What Does Medigap Plan N Cover?
So the big question becomes – how is Medigap Plan N different from Plan G or Plan F? 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 2020, that deductible is $198. 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 2019, 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
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 Plan G of around 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.
We do not recommend Plan G for most applicants anymore because of all of these factors. 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.