Ask The Medicare Specialist

QUESTION:

Question from Bob: Aaron, I see that you recommend Medicare Plan N over G. My wife just turned 65 and the agent she spoke with recommended Plan G instead of N. In fact, he has it himself. Based on his advice, she enrolled in G. Can you explain the differences between the two and why you recommend N? Her plan went into effect March 1st. Can she still change to N without worrying about any pre-existing medical conditions?

ANSWER:

Over the past year, I think I’ve written about this topic more than any other. I’ve been adamant that those who have plan G or other letters no longer available for sale, C and F, should move to N immediately if they can pass underwriting. This can be done all year long and is not limited to any election period.

One of the negatives of Supplements is that premiums are guaranteed to increase as one gets older. Those who buy a Supplement go into a pool with every other person who enrolls in that same letter plan with the same company in the state it’s purchased. If the pool is costing the company more than 85 cents in claims for every dollar they’re collecting in premiums during a certain time frame, they can apply for a rate increase on everyone in that pool. Plan G has not been performing well and companies are requesting and being approved for these “across the board” rate increases, as I call them, practically every year. Meanwhile Plan N has had almost none. In fact, during the past six years, the two companies we’ve enrolled the most clients with have had only one between them. We’re meeting and talking to people almost daily who’ve had Plan G for just five or six years and are paying $70 to $100 more per month than what N would cost.

There are almost no differences between Plan G and N. What’s covered is the same on both plans as is access to doctors and hospitals. They have the same annual Medicare Part B deductible of $226. Once the deductible has been met, with both G and N, there’s no cost for Medicare covered services such as blood tests, X-rays, CT scans, MRIs, surgical procedures, hospitalizations, chemotherapy, radiation, physical therapy, etc. The only two differences in out-of-pocket costs for those on Plan N are a $20 co-pay for a primary care or specialist physician office visit and $50 at the Emergency Room. That’s it. For those paying $1,000 more premium annually for G, for it to be of equal value as N, they would have to go to the doctor 50 times in a year!

I have no idea why any broker or agent would advise relatively healthy people to enroll in G instead of N. It makes no sense. I just did the math. Every licensed agent should know Plan G has increased much more rapidly in the last five years compared to N. I won’t say that most agents think about their paycheck first, but there are plenty who do. Almost all Supplement companies pay agents a commission that is a percentage of around 20% of the initial premium of a Supplement. Because G is more expensive, we get paid larger commissions to sell it.

I think there are also agents who also don’t understand how “Excess Charges” work when it comes to Supplements. When looking at the chart of what each letter plan covers, many will notice N doesn’t cover Excess Charges. Agents who don’t understand it or don’t want to sell N may scare people away by mentioning it could actually come into play. It won’t. Let me explain. First of all, it’s illegal to bill Excess Charges in eight states, including Pennsylvania. Secondly, only doctors and hospitals who don’t agree to take Medicare Assignment have the ability to utilize this practice. Doctors who work for a health care system such as UPMC, AHN, Excela Health and others all over the country do not have the choice to accept or not accept Medicare Assignment or other commercial insurance. That decision is made by the health system, and they sign “umbrella” contracts that apply to every doctor and facility they employ and own. There isn’t one health system in the country who doesn’t accept Medicare Assignment. Lastly, only the super-rich see doctors who don’t want to work for pennies on the dollar compared to what their wealthy patients pay them vs Medicare’s contracted rate. Even with the 15% maximum Excess Charges they can add on to Medicare’s billable amount, it doesn’t come close to the “cash” price rich patients pay.

Since 2010, when Plan N was first introduced, I estimate we’ve enrolled upwards of 10,000 clients on Plan N and all have been told to call us immediately if they get a bill more than their deductible or other than the $20 and $50 co-pays. We have never, not once, heard from a client who was billed Excess Charges. As far as Bob’s wife switching from G to N without going through underwriting and having her previous or current health issues taken into consideration, every company must accept her application into the plan letter of her choice for a period three months prior to and six months after her initial enrollment in Part B. If possible, recommend she and everyone else enroll in N unless they’re seeing a doctor and/or mental health provider upwards of 20 to 25 times per year combined. A couple quick reminders. We’re now licensed to offer Medicare Plans in over 20 states. In addition, we just started a new Facebook group, “Ask the Medicare Specialist” where we’ll be offering exclusive content. Go to our website and click the link to join.