If you, like most of the readers of this blog are concerned about your health, you might be wondering what you will do when it’s time to enroll in the US Medicare program. If you are reading this from another country, keep in mind that what I’m about to say doesn’t apply to you, and I’ll just use the term “Medicare” from now on.
When you are about six months away from turning 65 years old, you’ll start getting a lot of mail from insurance companies. And I mean A LOT of mail. Like a four inch stack of mail. Most likely it’s trying to get you to join a Medicare Advantage Plan. Why is that? Because it’s big money for insurance companies. Medicare Advantage Plans get a monthly fee from Medicare, somewhere in the neighborhood of $800 to $1000 per month.
This is because the insurance company is basically taking the place of original Medicare. Although you still have to pay for your Part B (which in 2020 was $144.60 for most people), you can’t show your Medicare card anymore and get service. You must follow the Medicare Advantage Plan’s rules.
With Medicare Advantage you still get access to the same services that original Medicare offers, but you are subject to “prior authorization”, meaning the insurance company can say that you don’t need the service.
For most people, this works just fine. But for some, Medicare Advantage doesn’t fit their needs.
For those people, Medicare Supplement Plans, also known as Medigap, work better.
If you’re considering a Medigap plan, there are some things to look out for.
As I write this, there seem to be many insurance agents promoting Plan N instead of Plan F. But before we can compare the two, you’ll need to know what a Medicare Supplement Plan is. And you’ll need to know that Medigap is just a shortened nickname for Medicare Supplement.
This is because Medicare Supplement Plans cover the gaps in Medicare. That’s why we call them “Medigap Plans.”
Medicare Parts A and B have portions you have to pay (or gaps), like deductibles, co-payments, and co-insurance. When you get services under Medicare, you have to pay those deductibles, co-payments or co-insurance amounts.
But if you have a Medigap plan, Medicare will first pay its share of your medical expenses first, and the Medigap plan will then pay its share second. If you have one of the former Plan F (not available to new Medicare beneficiaries, sorry!) then you don’t have any of these gaps at all, because it paid at 100%.
In 1990 Medicare standardized all Medigap plans. Each plan, identified by the letter, had to offer very specific benefits. This makes it easy to compare plans among insurance providers.
As mentioned earlier, you can’t purchase a Plan F unless you have a Part A or B effective date prior to 1/1/2020.
The monthly premium is the main difference between Medigap Plans with the same letter.
Most people who pick a Medigap plan at this time choose between Plan G and Plan N. Let’s take a look at the differences.
Medicare Supplement Plan G covers Medicare approved services after a small deductible. And I mean a small annual deductible. When you go to the doctor you’ll pay the Part B deductible and after that, it covers everything else at 100%. The Part B deductible is $198 in 2020, but it normally increases every year by a small amount.
This plan is by far the favorite.
But as I said earlier, there are some agents trying to get an upper hand by selling Plan N. They think that you’ll go for a $20 per month difference in monthly premiums without questioning what you are giving up.
Medicare Plan N has a $20 copay for some doctor visits. But that isn’t the real problem.
The main problem is that Plan N (unlike Plan G) doesn’t cover excess doctor fees. A doctor (or other approved provider) can decide not to accept Medicare assignment, even though he or she accepts Medicare.
If this is the case, he or she can bill you up to 15% of the Medicare approved rate, and your insurance won’t cover it.
The agents who are selling this plan love to point out that most doctors don’t charge excess doctor fees, and that’s true.
However, most restaurants were open prior to COVID-19.
We have no idea what the future holds.
Just because your provider isn’t currently charging this fee, doesn’t mean he or she won’t charge it in the future. Medicare keeps lowering reimbursement rates, squeezing doctors’ fees. At some point I believe the doctors will start charging excess doctor fees so that they can keep their staff, or pay their own medical school loans.
If you think you’ll be able to switch from a Plan N to a Plan G later, you might be wrong.
These plans are medically underwritten, meaning you will have to qualify medically to get a new plan. And who’s health doesn’t deteriorate as we get older? I know you are taking care of yourself, but things happen, and you might not be able to get a new plan that covers the excess doctor fees.
I recommend that you seriously consider the risk when you purchase a Plan N. If you are only saving $20 per month, it might not be worth the risk.
If you’d like more information, you can reach out to an insurance advisors at MedicareQuick. They are happy to assist you.