May 29, 2015
Whether you are just turning 65 and enrolling in Medicare, or are over 70 and looking to keep your health insurance cost down, seniors in Florida and across the country continue to search for the best value in Medicare Supplement coverage. Medicare Supplement Plan N should be among the top three Medigap Plans to consider. This Medicare Supplement Plan N review explains why.
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In a previous blog, we wrote of Medicare Plan F High Deductible as often the best value for seniors in Florida who are in generally good health. While Plan F-HD makes sense for most from a pure numbers perspective, many seniors prefer to have greater coverage, but balk at the high cost of a Plan F or realize that with Plans F and C being discontinued as of 2020, they do not want to be stuck in those specific Medicare Plans when no new younger seniors are allowed entry and the rising medical cost per aging beneficiary push premiums to prohibitive levels.
Enter Plan N, one of the most popular Medicare Supplement plans in the country because it covers all the most significant potential medical expenses, but at a cost much lower than a Plan F. In fact, the premiums for Plan N are often 30% to 35% less than Plan F. Plan N is one of the most popular Medicare Supplement plans in the state of Florida, as well as many other states across the country because of the cost to benefit features that make it one of the best values in Medicare Supplement plans.
Note in the table above that Plan N covers 100% of Medicare Part B coinsurance or copayment but has three asterisks denoting there may be an exception to this 100% coverage. The asterisks indicate that Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to $50 copayment for emergency room visits that do not result in an inpatient admission.
In other words, expect to pay a $20 copay when you visit your doctor. That’s it.
As of 2020, seniors will no longer be able to purchase any Medicare Supplement plan that pays the Medicare Part B deductible. This means that Plan C and Plan F will no longer be able to be purchased as of 2020 and all new plans will make the individual responsible for the annual deductible payment. Considering that most insurance companies actually charge you $200 or more just to send your annual Part B deductible to Medicare, the new rules may actually be a good thing for your pocket-book.
The annual Part B deductible is usually due on your first doctor visit of the year. If you have a Plan F or Plan C, the insurance company makes the payment for you, otherwise it is an expense for which you are responsible.
Currently, the annual deductible is just $147. While it is projected to rise to $250 per year by the year 2020, readers should be aware that the history of Part B deductible suggests that these projections are not carved in stone. The annual Part B deductible was just $100 from the late 1990’s through 2004. It worked its way up to $162 in 2011 and was then cut to $140 for 2012 and raised back to $147 by 2014. While it is more likely to rise in the future, any prediction of specific future rates should be taken with a grain of salt.
Anyway, back to Plan N: Because Plan N does not cover the annual Medicare Part B deductible, seniors with a Medicare Plan N Supplement can expect to pay the $147 each year before their Plan B benefits kick in.
So, so far we have $20 copays and a $147 for our 30% reduction in premium. Let’s continue.
The Part B Excess Charge sounds like it could be a significant issue, but in reality it’s not. Less than 4% of U.S. doctors and a similar percentage of U.S. Hospitals can even charge Part B Excess charges. When they do, the senior should know about the excess charge ahead of time, can avoid it with simple negotiation. In addition, the excess charge is strictly limited to no more than 15% of their total Part B medical bills.
From our point of view as we review Medicare Supplement Plan N, because seniors do not fully understand how simple it is to avoid Part B Excess charges, and how little these charges are likely to be, they are over billed for Medigap insurance coverages that include this feature of paying potential Part B excess charges. The probability of ever experiencing a Medicare Part B excess charge is probably close 5%. Ninety-five out of 100 seniors will never have to concern themselves with this issue.
Still, to better understand the concept, let’s break down how you can get Part B excess charges and how much they might total.
When a doctor or hospital* decides to contract with the Center for Medicare and Medicaid Services (CMS) they choose to be either a Participating provider or a Non-participating provider. Medicare pays Participating providers 5% more than they pay Nonparticipating providers. But to be a Participating provider, the doctor or hospital has to agree to only bill amounts approved by Medicare. They call this “Assignment” because Medicare assigns the rates charged for Medicare services. On average, these rates are approximately 15% to 18% on non-negotiated rates. This contract with CMS means that by accepting Medicare assignment, these doctors cannot charge Part B Excess charges.
*note: Most seniors associate hospital services with Medicare Part A. However, hospital outpatient services are Part B services. In addition, Physician Services while in a hospital are covered under Medicare Part B.
Of all doctors in the U.S. eligible to work with Medicare beneficiaries, 96% choose to be a Medicare Participating Provider. Thus 96% of doctors CANNOT charge Part B Excess charges and can only bill an amount that Medicare allows.
Approximately 4% (actually 3.30%) of U.S. doctors choose to become Nonparticipating Medicare providers. These doctors are paid 5% less by Medicare and do not accept Medicare assignment for billing. As a Nonparticipating provider, these doctors can charge Part B Excess charges (as can nonparticipating hospitals for their outpatient services). However, the amount of excess Part B charges is limited. While the actual calculation can be somewhat involved, in general, this limiting charge is 15% above their allowed Medicare reimbursement. This limiting charge is the maximum amount a nonparticipating provider can charge a Medicare beneficiary.
Let’s do a simple example:
Say that you had a Part B procedure that had a Medicare assignment rate of $300.
Medicare pays the nonparticipating provider 5% less than the assignment rate, so they will get $285. The doctor can charge up to 15% more than their Medicare reimbursement rate, so they can charge $327.75 for the service ($285 x 115%). The beneficiary is only responsible for the portion not paid by Medicare. This is not really a scary amount of money and certainly not worth paying an extra 30% insurance premium to avoid.
Do You Live In A MOM State?
There are some states that have outlawed Part B excess charges. The law, referred to as the Medicare Overcharge Measure (MOM), was adopted by Pennsylvania, Connecticut, Massachusetts, Minnesota, New York, Ohio, Rhode Island and Vermont. In these states, doctors working with Medicare must take Medicare Assignment and cannot charge Part B excess charges. For seniors living in these states that means that when or if you purchase a Medicare Supplement that insures against Part B excess charges (Plan F or Plan G) you are paying for insurance coverage you do not need! Why pay extra for Part B excess charge coverage when such charges are outlawed in your state? With Medigap Plan G and Medicap Plan F you are overpaying for your coverage by at least 15% and often more than 30%!
The first thing a senior on Medicare should do is confirm that their doctor takes Medicare assignment. If so, then you don’t even have to concern yourself with the fear of Part B excess charges. Even though fewer than 4% of U.S. doctors can even charge Part B excess charges, it’s still a possibility that a senior will run into such a doctor. In that case, if the doctor you want to see is a nonparticipating Medicare provider, simply ask the doctor to make a note in your file to only bill you at the Medicare assignment rate. While I can’t speak for all doctors, this does happen and most doctors that have control over their billing would rather keep the patient and charge assigned rates than lose a patient over such a small amount of money.
If you would like to know prices in your area, check out this handy tool from Mutual of Omaha: Mutual of Omaha price quote. We encourage you to also use our quote comparison feature to find prices from other insurance companies.
Choosing Plan N can save a senior 30% or more on their monthly premiums over a Plan F without a significant sacrifice in health insurance coverage. Our Medicare Supplement Plan N review shows why this is one of the top three Medigap plans in the U.S.
The senior with a Plan N Medicare supplement has to:
For many seniors, this is a very fair trade-off. Your health insurance is there to make certain you are not financially devastated by medical expenses in the case of serious illness. Medicare Parts A and B cover 80% of your Medicare approved health coverage and Medicare Supplement Plan N pays enough of the rest that you can be assured your personal costs are limited.
I welcome your questions.