Medicare Supplement Plan N is a supplement that covers all costs except the Part B deductible and excess charges. Plus, you pay a small copay for doctor’s office and E.R. visits.
In this article, we’ll look at Medicare Plan N, the newest of the 10 standardized plans, to help you understand if it’s your best option.
- Plan N covers most of the same benefits as the two most popular policies, Plan F and Plan G.
- Premiums are significantly lower than Plan F and Plan G.
- Benefits don’t change. It generally takes an Act of Congress.
- Policyholders can use Medicare providers nationwide without restrictions.
- It pays all of the Part A deductible, Part A hospice and skilled nursing coinsurance, and the first 3 pints of blood.
- It covers 80% of foreign travel emergency care.
- Plan N is guaranteed renewable and comes with a 30-day free look period.
Plan N Medicare Supplement Benefits
Medicare supplement insurance, often called Medigap or supplemental Medicare insurance, is coverage offered by private insurance companies. These policies cover the gaps in Original Medicare (Part A and Part B) coverage.
You might hear these plans called Medicare Part N, but this is not correct. Only Medicare organizes its coverage in parts. Medigap insurance companies sell standardized plans.
The best way to understand Plan N Medicare Supplement benefits is to look at a chart that shows the coverage gaps in Original Medicare:
The lefthand column shows a list of benefits covered by each plan. These are the gaps in Original Medicare.
Coverage gaps come in the form of deductibles, copays, coinsurance, and additional charges. Understanding whether or not Plan N is the best Medigap plan for you comes down to understanding the gaps Plan N does not cover:
- Plan N does not cover the Medicare Part B deductible. You pay all Part B costs until the deductible is met.
- Plan N does not cover Part B excess charges. These are additional charges some providers add if they do not accept Medicare’s standard rates.
- Plan N charges a small copay for doctor visits ($20) and emergency room visits ($50).
Due to what Plan N does not cover, this plan is most beneficial to healthier individuals who rarely use healthcare services outside of preventive care.
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Medicare Coverage Gaps in Detail
In order to fully understand Plan N benefits, it is essential that you have a complete grasp of the gaps in Original Medicare and the risk of not having a particular gap covered.
Part A Coverage Gaps
Medicare Part A is your hospital insurance. It pays for your inpatient care.
Most Medicare supplements cover all or most of the Part A out-of-pocket costs. Plan A, not to be confused with Part A, is the only policy that does not cover at least some of the Part A deductible. And it’s a whopper. For this year, the Part A deductible is $1,632 per benefit period. Medicare Supplement Plan N covers this deductible in full.
The other big Medicare Part A gap is the Part A coinsurance. This is a daily cost once you use up your lifetime reserve days. With all supplemental Medicare policies, you are covered for an additional 365 days of hospitalization.
While we’re on the subject of hospitalization, let’s talk about blood. It’s often overlooked, but are you aware that a pint of blood, given away for free to the Red Cross, sells to a hospital for $300 per pint or more? And Medicare doesn’t pay for the first three pints your use, you do! Fortunately, all Medicare supplements cover some or all of the first three pints of blood. Plan N covers them 100 percent.
When you’re released from the hospital, there is a very good chance that your doctor will send you to a Skilled Nursing Facility (SNF) to get better. The SNF has its own coinsurance. This can hit your wallet hard, too. Medicare Plan N covers 100 percent of these charges.
Finally, there’s hospice care. Fortunately, Medicare covers just about all of the costs for hospice at home or in an approved facility. The minor copayments not covered are covered in full by Plan N.
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Part B Coverage Gaps
Medicare Part B is your medical coverage for doctor visits, tests, supplies, and other outpatient services. And, even though its potential costs are nowhere near as big as the Part A costs, they can add up very fast.
Your Part B out-of-pocket costs include:
- Part B deductible (annual)
- Part B coinsurance and/or copayments
- Part B Excess Charges
As of 1 January 2020, the Part B deductible is unavoidable for new Medicare beneficiaries. Congress passed a bill that no longer allows it to be covered by a Medigap policy. As a result, Plan F and Plan C are no longer available to new beneficiaries. So, you’ll pay the full amount for your doctor visits, tests, and supplies until you’ve reached the $240 Part B annual deductible.
Most of the Part B cost-sharing comes in the form of Medicare Part B’s coinsurance (a percentage) or copayments (a fixed amount). Medicare pays 80 percent of an approved amount, and the beneficiary pays the remaining 20 percent. The good news is that all supplements cover some or all of these costs. Plan N covers some, but not all.
With a Plan N policy, you pay up to $20 for a doctor’s office visit and up to $50 for emergency room visits. All other Part B coinsurance costs are covered 100 percent.
What a Plan N policy does not cover are Medicare Part B Excess Charges. These are additional costs, up to 15 percent over Medicare’s approved amount, that healthcare providers can add to your bill if they do not accept Medicare assignment. Plans F and G are the only plans that cover this cost.
Part D Coverage Gap
In the past, Medicare supplements were allowed to cover prescription medications. This is no longer the case. That’s because in 2003 Medicare Part C (aka, Medicare Advantage) and Medicare Part D (prescription drug plans) were added as options.
Even if you do not have regular prescriptions, it is highly advisable to enroll in a Medicare Part D plan. Even though Part D is optional, there are penalties for not enrolling on time or having other creditable coverage. All stand-alone Medicare Part D plans work with a supplemental Plan N policy.
The Ideal Plan N Candidate
Now that you better understand how Medicare Supplements help pay your out-of-pocket costs, let’s talk about who can benefit from a Plan N policy.
The big benefit to Plan N vs. Plan G or Plan F is lower premiums. In most areas, you can expect to pay around 20 percent less vs. a Plan G policy. These cost savings favor two different people:
- Healthy people who rarely have medical expenses; and
- People in high-cost-of-living areas.
It’s important to remember that Medicare covers 100 percent of your annual wellness exam and many other preventive services. You pay nothing for preventive services, so the Plan N copay does not apply. This is why Plan N is so cost-effective for healthy people and those who maintain their health.
For people in high-cost-of-living areas — Florida, New York, and Connecticut are three good examples — high healthcare costs can be mitigated with a Plan N policy and a savings account. Let’s take a 65-year-old woman living in South Florida as an example. Plan G rates start at about $185 per month whereas Plan N rates start at about $135 per month. That’s a difference of $600 per year.
People in good health, and those with minor health issues, can benefit from Plan N by putting away the difference between a Plan G policy and Plan N to cover Excess Charges and the small copays to see their doctor. If your primary care doctor and specialists do not tack on Excess Charges, or if you live in a state that does not allow Excess Charges, Plan N makes even more sense.
Eight states prohibit Excess Charges:
- New York,
- Rhode Island, and.
Medicare Advantage Plans vs. Plan N
This discussion would not be complete without contrasting Plan N Medigap coverage with Medicare Advantage. Doing so, however, is like comparing apples and oranges. They are very different.
Like Medicare Supplement Plan N, Medicare Advantage plans are a good option for healthy people. That’s where any similarity ends.
Many Medicare Advantage plans have a low monthly premium or a zero-dollar monthly premium. However, that does not mean there are no costs. With Medicare Advantage, you pay most of your out-of-pocket costs when you use healthcare services.
When you see your doctor, you’ll pay a copay.
If your doctor refers you to a specialist, you’ll pay another copay.
If your specialist refers you for surgery or tests, you guessed it, you’ll pay a copay.
This is true with Original Medicare, too, but Plan N covers most of those out-of-pocket costs. Plus, it travels with you when you’re away from home. Unless you’re having a medical emergency, a Medicare Advantage plan will not cover you and they cover nothing abroad, not even a medical emergency.
Here’s the big difference between Medicare Advantage and Original Medicare plus a Plan N policy. With Medicare Advantage, you pay little upfront. Most of your costs come when you use healthcare services. As a result, it is very difficult to plan for future health issues.
With Original Medicare and Plan N, you pay most of your costs in advance. If you’re someone who likes the peace of mind of knowing that your major healthcare bills are taken care of, this is the way to do it.
NOTE: It should also be mentioned that most Medicare Advantage plans require you to use their network of providers and to get referrals to see a specialist. This is not the case with Medigap N plans. Use any provider that accepts Medicare.
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Who Shouldn’t Buy a Medigap N Plan?
Generally speaking, anyone who qualifies for Medicaid or one of the four Medicare Savings Programs should not buy a Medicare supplement, including Plan N. If you qualify for these programs you will not qualify for a Medigap policy. Moreover, you won’t need to because the government will assist you with your out-of-pocket costs.
The same is true if you have one of several serious illnesses, including End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). When you have one of these severe conditions, Medicare assists with your costs.
Finally, you may not be a good candidate for Original Medicare and a Medicare Plan N coverage if you are institutionalized or have a severe or disabling chronic condition, including:
- Chronic alcohol and other dependencies
- Autoimmune disorders
- Cancer (excluding pre-cancer conditions)
- Cardiovascular disorders
- Chronic heart failure
- Diabetes mellitus
- End-stage liver disease
- Severe hematologic disorders
In these cases, and where available, a Medicare Advantage Special Needs Plan (SNP) is a better option. A licensed insurance agent can help you identify plan options in your area.
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Medicare Supplement Insurance Plan N is an innovative plan that saves money by shifting some of the minor shared costs to the beneficiary while covering the major costs. It is by far the best option for healthy people who are open to the risk and the reward.