Most of the Medicare Medigap plans on the market are similar in kind with slight variations in coverage as they include or exclude various benefits categories (such as Part B deductible or excess charges). The N Medigap plan is a bit different than the rest and consequently it has been pretty popular as an option on the Medicare supplement marketplace. Let\’s take a look at what it covers, how it differs, and whether it\’s a good buy versus the dominant plan on the market – the F Medigap plan.

First, we\’ll look at the various Medicare supplement categories to see what the N plan does cover. First, we\’ll begin with the most important gap in traditional Medicare which is Part A cost-sharing. As we\’ve noted, Part A deals with hospital costs and it\’s broken up into two sections; a Part A deductible and Part A co-insurance. Essentially, you have to pay the deductible first in calendar year (for 2012, it\’s $1156) and then you start paying 20% of the charges if you have no Medicare supplement plan coverage. With the N plan, both of these (the deductible and the 20% that Medicare does not pick up) are covered in full so that\’s a really good start. The 20% co-insurance is really a major concern since there\’s no cap so it\’s important to do this well which the N Medigap plan does.

Now let\’s look at where the N Plan is different from most. For this, we\’ll now look at the Part B benefits. Part B deals with physician costs and those associated with physicians which is generally speaking, not facility-based. Part B also has a deductible and 20% co-insurance. First things first…the N Medicare supplement plan does not cover the Part B deductible but that\’s not a great concern as 2012\’s deductible is $140. That\’s not an uncapped amount so we can factor those in to our cost calculation. The Part B co-insurance is another story but the N plan still works well there. Once you meet the deductible, the N plan will require you to pay $20 copays for physician visits and $50 copays for ER visits. If you are admitted to the hospital, the emergency room visit copay will be waived. Essentially, you\’re going to have office visits and ER copays after the deductible is met.

The N Medigap plan covers the first 3 pints of blood, Hospice care coinsurance or copayment, Skilled Nursing Facility coinsurance,Foreign Travel Emergency coverage after $250 deductible, and the Medicare Preventative Care Coinsurance segments. So what\’s missing (outside of the cost sharing on the physician and ER visits)? We talked about how the Part B deductible isn\’t covered we can factor that into our comparison with the F plan since it\’s a fixed cost. There is one hole in the N plan we need to address. The N Medicare supplement plan does not cover the Part B Excess which is an issue due to the uncapped nature of it. Excess is the amount that a contracted doctor can charge above what Medicare allows. It can be up to 15% higher than the Medicare allowable amount and there is no cap to this excess. The F and C plans will cover the Excess charge while the N plan will not. The concern here is we can\’t readily account for how much risk this is. It may be $100 in a year or it may be $1000\’s. Generally speaking, we don\’t want to trade unlimited even if imporbable risk for a 30% discount on premium which we can safely estimate at at $125 for the F plan (age 65 in California) for argument\’s sake. 30% savings takes us down to $100/monthly. We\’re looking at a $300 annual savings to take on the excess risk and the Part B deductible which we\’re likely to hit since it covers first dollar physician expenses. That\’s $140 in 2012 or roughly half our savings. We\’re looking at about $10/monthly now to take on the excess charge in our example. That\’s not our favorite trade off. Keep in mind that not every carrier will offer the N plan so if you really want a specific carrier, let us quote them for you and research what plans are available in your State. As a quick synopsis, we\’re okay with trading premium savings for capped or medical cost-sharing we can readily calculate (the fixed Part B deductible as an example) but hesitant to take on unlimited expenses (Part B Excess). This still points towards the F plan over the N plan in our opinion but we\’re happy to help you compare both for your situation.

Dennis Jarvis is a licensed insurance agent concentrating on medicare supplement insurance.