March 6, 2018

Plan N is often a hot topic among independent insurance agents – is it worth the risk, especially when you put it up against a Plan G or Plan F? More importantly, clients are going to ask you which plan is the best Medicare Supplement, and oftentimes, the best supplement is subjective.

Selling a Medigap Plan N can make sense in certain situations, but first, it’s important to take a look at the reality of the premium savings compared to the copayments and potential of excess charges.

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Is the Plan N premium low enough to be worth it?

The big upside to Medicare Supplement Plan N is the lower premium compared to Plan F and G. The severity of the cost savings really depends on where you’re selling, but in reality, the difference between an N and G can be pretty slim.

Let’s take a look at a few comparisons for a 67-year-old female who doesn’t use tobacco.

  Detroit, MI Fort Wayne, IN Robinson, IL Lubbock, TX Inman, KS
Plan N $103.85 $83.91 $83.75 $88.08 $84.91
Plan G $114.15 $90.25 $92.52 $101.08 $97.42
Plan F $153.54 $114.36 $117.49 $133.60 $124.73

The average savings between a Plan N and a Plan F is about $40. The average savings between a Plan N and a G is about $10, with the range between $6.34 on the low end and $13 on the high end.

In Cincinatti, OH, the gap between a G and N is about $17, and in Chicago, IL, the gap is about $21, but that’s about as high as we’ve been able to find.

Given the premium difference, the next discussion to have with the client is the benefit difference between an N, G, and F.

The glaring difference between a Plan N and a G is the copayments you have with an N as well as potential excess charges.

Keep in mind that the Plan F doesn’t require the client to pay the Medicare Part B deductible, but the insurance companies often charge a higher premium than what the deductible would have been in the first place, costing your clients more in the long run.

Another consideration is that for new turning 65ers, Plan F won’t be available after 2020, so the discussion will largely turn to Plan N vs. Plan G.

What about Plan N copays?

Unlike Plans F and G, Plan N does have copays. The copays are up to $20 for some office visits and up to $50 for emergency room visits that don’t result in inpatient admission.

For many people, the concept of copays are familiar. Most major medical plans have copays, and your clients are likely used to them.

While Plans F and G don’t have copays, which simplifies things, the thought of copays aren’t necessary a dealbreaker for clients.

However, if the client is constantly in and out of the doctor, there comes a point where it’s more cost effective to just have a Plan G.

Using the same rate examples from earlier, let’s see how many times a client could go into the doctor before they’d have spent the same amount as they would have on a Plan G premium.

  Detroit, MI Fort Wayne, IN Robinson, IL Lubbock, TX Inman, KS
Plan N (yearly) $1,246 $1,007 $1,005 $1,057 $1,019
Plan G (yearly) $1,369 $1,083 $1,110 $1,213 $1,169
Price difference $123 $76 $105 $156 $150
Doctor office visits 6 visits 3 visits 5 visits 7 visits 7 visits

If your client goes to the doctor more than this, a Plan G can be a better alternative. Keep in mind this isn’t taking into account emergency room visits, which cost $50 each time.

It can also be hassle to do this much research before meeting a client. Giving a client too much information can be overwhelming, and before long, they might be paralyzed by confused.

However, logical thinkers tend to enjoy this type of information. They want the best plan for the best price, and arming them with all the extra details can help move the sale along.

A good rule of thumb is to have a feel for what the rates look like in your area – is the premium difference between a G and N significant enough to make sense for the client?

Would the client rather not fuss with additional medical bills, even if it means paying a little extra for the monthly premium?

What about excess charges?

Most doctors and providers accept Medicare assignment, meaning that they agree to pay a Medicare-approved amount for a certain service.

For example, a doctor might charge $1,500 for a procedure, but Medicare only approves $1,200 for that procedure. If the doctor accepts assignment, they’ll lower their billing rate to the approved $1,200. If they don’t accept assignment, the patient will receive a bill in the form of an excess charge.

Excess Charges

Medicare.gov defines an excess charge as such:

“If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.”

The issue with Medigap Plan N is that excess charges are not covered, while Plan G and Plan F do cover excess charges.

The thought of the unknown can be troubling to seniors, but it’s important to realize that most doctors accept Medicare assignment.

To avoid any excess charge bills, all your client has to do is ask if their doctor accepts Medicare assignment before ever going in for a visit.

The Mayo Clinic is a well-known facility that doesn’t accept Medicare assignment, but in other cases, just have your client ask the doctor beforehand.

But again, this is another potential point of confusion for your client. Would they rather not have to worry about excess charges and go to any doctor in exchange for a slightly higher premium of a Plan G?

And in other cases, would that client rather pay a single monthly premium and not receive any bills for Medicare-approved charges (Plan F)?

In many cases, a client might put a price tag on the potential “hassle factor” of additional medical bills, and they might be happy to pay extra for that monthly premium to offset the hassle.

So, again – the “best Medicare Supplement” for any one client is always going to be subjective.

What about rate increases?

Rate increases can quickly throw off your entire presentation – at some point, a Plan G can have a higher premium than an F due to a recent rate increase, while the same can go for an N.

In any case, a rate increase can close the price gap between one plan and the next, making your client question if they’re overpaying for their benefits compared to the next-best-coverage.

It’s a constant battle to stay on top of which plan in the most competitive at any given moment, but Plan N does have a slightly more welcoming rate increase history.

David Friedman, Aetna’s Regional Sales Manager for the Midwest says, “Plan N has lower rate increases year over year – especially in Aetna’s portfolio.”

This is just something else to think about when presenting the different plan options to your clients.

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Is Medigap Plan N cost effective for my client?

At the end of the day, Plan N has certain advantages, such as a lower monthly premium and a more stable rate increase history. However, there comes a point where those advantages might not be strong enough when you compare an N to a G.

It’s really up to your client – are they willing to take the risk of the potential copays and excess charges in exchange for a little bit of savings on the premium?

One area where the premium savings can be an advantage to your presentation is when you suggest a cancer plan.

This is also easy to do when you compare a G to an F, and you can see how Chase Gruening packages a Plan G with a cancer plan in the video below:

When you compare the savings between an F and an N, it can be easier to find that money to put towards a cancer policy.

So, is Medigap Plan N cost effective for your client? It depends on where you live and how much risk your client is willing to accept.

In many cases, a Plan G is easier to understand, and you don’t have to worry about counting the dollars to see if you made a good decision.

But at the end of the day, your job is to present the options to your client and let them make their own decision.

What are your thoughts on Plan N? Do you think it’s a good deal for your client?

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