In most U.S. states – except for Minnesota, Massachusetts, and Wisconsin – residents over 65 have 10 Medicare Supplement Insurance plans to choose from. These are plans that offer more benefits than a basic Medicare policy. Because they fill in the “gaps” in Medicare, they’re also known as Medigap coverage.
Medigap is standardized from state to state, so it’s easy to compare the costs and benefits of each plan to see which one is right for you. Two of the most popular plans are Plan N and Plan G. Not every insurance company offers every Medigap policy, but the plans will be the same regardless of which company you choose. Only the monthly premium will be different.
You can only buy a Medigap plan if you have Original Medicare Part A and B, and if you don’t have a Medicare Advantage plan. The best time to enroll is when you first sign up for Medicare, since during that time, insurers aren’t allowed to turn you down or charge you a higher monthly premium due to pre-existing conditions. After that, you’ll be subject to medical underwriting, which means the company can take your health status into account.
You may choose to purchase prescription drug coverage separately through Medicare Part D, since that isn’t included in Medigap coverage.
In this article, we’ll take a look at both Plan N and Plan G and compare the differences between the two, as well as the typical costs for each policy.
MEDICARE PLAN N
Medicare Plan N is a supplemental insurance policy that covers some of the expenses not covered by Original Medicare, such as the Part A coinsurance and deductible. However, it doesn’t cover the Part B deductible or “excess costs,” which are costs a provider charges beyond the amount covered by Medicare (these are capped at 15%).
As with all Medigap plans, you can see any provider who accepts Medicare anywhere in the U.S. and you aren’t restricted to doctors in a particular network. You’ll also be covered for 80% of costs for emergency treatment overseas during the first 60 days of foreign travel.
Let’s look at some of the services that Plan N does and does not cover. First, Plan N will cover your Part A (hospital care) deductible, which is $1,364 for the first 60 days of care. It will cover the gap fee ($341) for the following 30 days, and it will cover 100% of all eligible expenses for 365 days after your Medicare coverage runs out. You’ll also have 60 “lifetime reserve days” during which it will cover the gap fee of $682 per day.
Plan N pays coinsurance and copayments for hospice care, as well as the gap fee ($170.50 per day) during the first 100 days of nursing home care. Plan N covers 3 pints of blood per calendar year and Medicare pays the rest.
For Part B (emergency and medical care), Plan N will pay for all expenses that aren’t covered by Medicare except for the $185 deductible per year. You’ll also be expected to pay a $20 copay for office visits and $50 copay for emergency room care. You won’t be covered for any excess costs your provider charges beyond the Medicare-approved amounts.
Plan N is a relatively good value for money. Although you aren’t covered for every conceivable expense, most of your major out-of-pocket costs are covered, and Plan N is typically cheaper than comparable Medigap plans.
Your monthly premium will depend on which state you live in. Here are the average costs for a 65-year-old non-smoker in 3 states:
Fort Worth, TX: $94-120
Los Angeles, CA: $113-150
Miami, FL: $198-248
As you can see, your premium can vary significantly based on your zip code. Some groups of people, such as retirees in Florida, may find Medicare Advantage to be more affordable.
MEDICARE PLAN G
Medicare Plan G offers slightly more comprehensive coverage than Plan N, but with higher monthly premiums. In particular, Plan G covers “excess charges” that go beyond Medicare’s approved rates. For example, if your doctor charges more for a procedure than the amount Medicare covers, you won’t have to pay the difference; Plan G will cover it.
That makes Plan G more comprehensive, but that extra coverage may be unnecessary if you only rarely visit providers who charge more than the approved rate. Although, sometimes you may see a doctor who charges an excess charge without realizing it. For example, in a hospital or emergency room, you don’t always know what the doctors charge until you are billed later.
Here’s a closer look at what Plan G covers. First, it will cover your Part A deductible ($1,364) for the first 60 days and will cover the gap fee ($341) for the next 30 days. As with Plan N, you’ll be covered for $682 per day for 60 lifetime reserve days, and 100% of eligible expenses for 365 additional days after your Medicare coverage runs out.
You’ll be covered for the first 100 days of nursing home care and for the coinsurance and copay for hospice care. You’ll also be covered for 3 pints of blood (Medicare pays the rest).
You won’t be covered for the Part B deductible ($185 per year), but you will be covered for any excess costs charged by your provider beyond the Medicare-approved amount. Unlike Plan N, there is no copay for office or emergency room visits.
The cost for Plan G is higher than for Medigap policies, because of its more comprehensive coverage. Depending on where you live, it could cost $50 – $100 more than other plans.
For a non-smoking male who’s just turned 65, here’s what you can expect to pay in these 3 major cities:
Fort Worth, TX: $116-134
Los Angeles, CA: $142-172
Miami, FL: $255-300
Women typically have lower rates for all policies, and if you are married to a Medicare holder, you may qualify for a discount (but spouses must still purchase their policies separately).
WHAT PLAN N AND PLAN G HAVE IN COMMON
Although there are some differences between the two plans, most of the coverage is the same between the two policies. Here’s a quick look at what they have in common:
Part A deductible
Blood (first 3 pints)
Nursing home & hospice care
Foreign emergency care
Part B deductible
Vision & dental
If you need care in any of the categories that aren’t covered, you’ll have to buy those separately, regardless of which Medigap policy you choose. For example, you can purchase prescription drug benefits through Medicare Part D in addition to your Medigap policy.
HOW PLAN N AND PLAN G ARE DIFFERENT
The main differences between the two plans are some of the expenses you’ll pay for outpatient care. Plan N has a copay of $20 for office visits and $50 for emergency room visits (which is not charged if you are admitted to the hospital). Plan G doesn’t have a copay for these visits.
You’ll also notice a difference for coverage of excess charges. Doctors can charge more than the Medicare-approved amount for particular services (but no more than 15%). Plan G covers these excess charges and Plan N does not. Let’s compare these differences:
$20 copay for office visits
$50 copay for emergency room visits
Excess charges are NOT covered
No copay for office visits
No copay for emergency room visits
Excess charges ARE covered
So, you can see that Plan G has fewer out-of-pocket costs but may have a higher premium. It’s up to you decide whether the additional coverage is worth it based on your health status.
YOU SHOULD CONSIDER A PLAN N IF:
- You’re relatively healthy and only see a doctor once or twice a year. You’ll have to pay a $20 copay for your annual checkup, but you’ll save money by having a lower premium.
- You’re on a budget and can’t afford the Plan G premium. You might end up with higher out-of-pocket costs on Plan N, but you prefer that to higher premiums.
- You don’t anticipate being hospitalized and you know how to avoid excess charges. Most doctors charge the Medicare-approved amounts, so if you ask in advance, you can avoid surprise fees.
YOU SHOULD CONSIDER A PLAN G IF:
- You see a doctor frequently for regular medical tests. Even though you pay a higher premium for Plan G, your copays will be covered.
- You anticipate being hospitalized or our doctor charges excess fees. If you don’t want to worry about visiting a provider that charges excess fees, Plan G will cover those expenses.
- You can afford the premiums. Even if Plan N would save you money, you prefer Plan G’s more comprehensive coverage for the peace-of-mind.
Remember that whichever plan you choose, changing plans becomes more complicated once you’ve passed the initial enrollment period. You can’t just try one out now and change it later.
After the enrollment period ends, insurance companies can take your health status into account to decline coverage or charge a higher premium. So if you wait to apply for a plan until after you develop health issues, you may have a harder time finding an affordable premium.
So don’t just consider your current health status. Try to predict what your medical expenses will be like as you age so you can choose a plan that meets your long-term health care needs.