As of June 1, 2010 Medicare released the 2010 Modernized Medicare Supplement (Medigap) plans. These plans are standardized. For example, if you buy a Medigap Plan F (or A, B, C, G, M or N) from one company, the coverage must be identical to a Plan F sold by another company. The premium can vary, and the solvency of the company, but the coverage itself must be identical.
If you are happy with your current Medigap plan, you can choose to keep it; however, going forward, insurance companies can only offer these modernized plan options to their new customers.
New to the lineup of Medigap plan options is Plan N. This plan costs on average about 25 percent less than Medigap Plan F. Plan F has been the most popular Medicare Supplement option because it fills all the gaps in Medicare. Plan N costs less because it requires seniors to pay $20 co-pays when they see a primary care doctor or specialist. Seniors will also pay $50 if they go to the emergency room.
However, the Part B deductible ($155 in 2010) is not covered by Plan N; and the plan does not cover excess charges — the 15 percent additional amount a provider can choose to charge over and above what Medicare allows.
All other services (hospital stays, skilled nursing stays up to 100 days, physical therapy and labs, etc.) get covered completely beyond the co-pays mentioned here. Medicare pays its part of the bill and Plan N pays the balance.
Is Plan N a better value than Plan F? The answer is found by looking at the premiums, then taking into consideration the additional charges incurred under a Plan N. If the premium difference is only $20 to $30 per month, perhaps not. However, one place where Plan N can definitely be a good choice is when people have pre-existing conditions and have not been able to leave their current Medicare supplement. At least one major company is offering Plan N on a guaranteed issue basis, meaning no health questions to qualify.
Medicare supplement Plan N could also prove to be a viable option for Medicare beneficiaries who wish to leave a Medicare Advantage Plan. In fact, Plan N was created to somewhat mirror Advantage Plans, which have co-pays for services in return for “hopefully” lower premiums. Medicare Advantage customers are now in what is called the “lock in” period, where no plan changes can be made until the Annual Enrollment Period that begins Nov. 15, 2010 for 2011 plan selections.
What’s going to change in Medicare? For one, 2011 reimbursement rates from Medicare to Medicare Advantage plans will not change in 2011, but in future years they will decrease. This could mean upward pressure on Medicare Advantage premiums.
A second change, effective now, is that beneficiaries receive additional help if they reach the coverage gap on their Part D prescription plans. Additional help in the Rx coverage gap will soon come from major pharmaceutical companies, which have pledged to offer prescriptions in the Rx coverage gap for significantly less cost.
As part of health care reform, Congress also passed “The Class Act” — a program that provides guaranteed issue long-term care coverage, but only for people who have been employed for at least five years. The act limits coverage to only $50 per day. The government will charge a premium for anyone who wishes to participate, and premiums are not guaranteed — they could rise. Anyone 50 and older should probably compare The Class Act to what is available in the private long-term care insurance market.
ABOUT THE AUTHOR
Tom Russell is a Senior Health Insurance Specialist and independent agent with 17 years of service to the Rim Country.
He can be reached at (928) 474-1233 or www.TomRUSSELLinsurance.com.