What is Medicare Supplement Plan N and How Does it Compare?

What is Medicare Plan N?

Medicare Plan N is one of 10 standardized Medigap plans, available in all but 3 states. This popular plan is particularly beneficial to healthy individuals.

In this article, we’ll take a look at Plan N, the newest of the 10 standardized plans, to help you understand if it’s your best option.

What are Medicare Supplement Insurance Plans?

Medicare supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage., often called Medigap or supplemental Medicare insurance, is a private insurance product offered by life and health insurance companies. These specialized insurance policies cover the gaps in your Original Medicare coverage.

Created at the same time as the federal Medicare programMedicare is a federal health insurance program for people ages 65 and older and people with certain disabilities., Medicare supplement plans are regulated and standardized, but they are not a health insurance product. Medicare supplements are a form of indemnity insurance, and coverage can be denied.

The best way to understand is to compare Medicare Supplement plans using a chart that shows what each plan covers:

The lefthand column shows a list of benefits. Another way to look at it is a list of the gaps in Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage.. These gaps come in the form of deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., copays, coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. , and additional charges. Choosing the best Medigap plan comes down to covering the gaps that you feel are the riskiest vs. what you can afford.

NOTE: Medicare supplements are in lockstep with Original Medicare. In other words, if Original Medicare does not cover it, a Medicare supplement can’t cover it, either. The only additional benefit some Medicare supplements offer is foreign travel emergency coverage.

IMPORTANT: Eligibility for a Medicare supplement is directly linked to your Medicare eligibility, with one caveat. The is a six-month period of time when every new Medicare beneficiaryA person who has health care insurance through the Medicare or Medicaid programs. has a guaranteed issue rightGuaranteed-issue is a right granted to Medicare beneficiaries and applies to Medicare Supplement insurance (aka, Medigap plans). All states and the federal government enforce this essential right, which protects Medicare beneficiaries from medical underwriting. (Medigap protection). During this time you have the right to buy the plan of your choice. Once your Medigap protection period expires, an insurance carrier can refuse to issue you a policy.

Medicare Part A Coverage Gaps

Medicare Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. is your hospital insurance. It pays for your inpatient careInpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition..

Most Medicare supplements cover all or most of the Part A out-of-pocket costsOut-of-Pocket Costs for Medicare are the remaining costs that are not covered by the beneficiary's health insurance plan. These costs can come from the beneficiary's monthly premiums, deductibles, coinsurance, and copayments.. 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 $1,600 per benefit periodA benefit period is a method used in Original Medicare to measure a beneficiaries use of hospital and skilled nursing facility (SNF) services. With each new benefit period, the beneficiary is charged a new benefit.... Medicare Supplement Plan NMedicare Supplemental Plan N is one of the ten standardized Medigap plans. Although it is one of the newest plans available, Medicare Plan N is quickly becoming a favorite with Baby Boomers aging into their... 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 daysMedicare Part A covers up to 90 days of inpatient care per benefit period. Beneficiaries get an additional 60 days of coverage known as lifetime reserve days. Lifetime reserve days can be used once. Beneficiaries.... 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 Supplement Plan N covers 100 percent of these charges.

Finally, there’s hospiceHospice is a special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional, and spiritual needs of the patient. care. Fortunately, Medicare covers just about all of the costs for hospice at home or in an approved facility. The minor copaymentsA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service. not covered are covered in full by Plan N.

Medicare Part B Coverage Gaps

Medicare Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services. 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 $226 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 ChargesA Medicare Part B excess charge is the difference between a health care provider’s actual charge and Medicare’s approved amount for payment.. 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 assignmentAn agreement by your doctor to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.. Plans F and G are the only plans that cover this cost.

Medicare 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 CMedicare Part C is Medicare's private health plan option. Also known as Medicare Advantage, Medicare Part C plans are a type of Medicare health plan offered by companies that contract with Medicare to provide all... (aka, Medicare Advantage) and Medicare Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... (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 coverageCreditable coverage refers to health insurance or prescription drug benefits that meet Medicare's minimum qualifications necessary to avoid a penalty.. All stand-alone Medicare Part D plans work with a Medicare Supplement Plan N policy.

Who is the Ideal Candidate for Medicare Supplement Plan N?

Now that you better understand how Medicare supplements help pay the out-of-pocket costs in your Medicare Part A and Part B coverage, 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:

• Connecticut,
• Massachusetts,
• Minnesota,
• New York,
• Ohio,
• Pennsylvania,
• Rhode Island, and.
• Vermont.

Medicare Advantage Plans vs. Plan N

This discussion would not be complete without contrasting Medicare Supplement Plan N 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 plansMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B). 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 emergencyWhen you believe you have an injury or illness that requires immediate medical attention to prevent a disability or death., 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 Medicare Supplement Plan N. Use any provider that accepts Medicare.

Who Shouldn’t Buy a Plan N Policy?

Generally speaking, anyone who qualifies for MedicaidMedicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. 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 DiseaseEnd-Stage Renal Disease (ESRD), also known as kidney failure, is a condition that causes you to need dialysis or a kidney transplant. People with ESRD are eligible for Medicare coverage regardless of age. (ESRD) or Amyotrophic Lateral Sclerosis (ALS). When you have one of these serious conditions, Medicare assists with your costs.

Finally, you may not be a good candidate for Original Medicare and a Medicare Supplement Plan N if you are institutionalized or have a severe or disabling chronic condition, including:

1. Chronic alcohol and other dependencies
2. Autoimmune disorders
3. Cancer (excluding pre-cancer conditions)
4. Cardiovascular disorders
5. Chronic heart failure
6. Dementia
7. Diabetes mellitus
8. End-stage liver disease
9. 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.

Summary

Medicare Supplement Plan N is an innovative plan that saves money by shifting some of the minor shared costsAn amount patients pay for their share of the cost of medical service or supply, like a doctor’s visit, hospital inpatient visit, or prescription drug. 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.