Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits. Now, today's
topic is supplemental plan G versus supplemental plan N. And the question is, which is better?
And so as we look at that question, I want to do a quick review on how original Medicare
works. So if you decide to stay in the original Medicare system of A and B, you are going
to have six different liabilities, we also call those gaps, and these liabilities mean
this is what you're going to be responsible for financially. Medicare is going to pay
and pays fairly well, but they're going to leave you with these liabilities that we call
gaps in your coverage. So we actually have three gaps on the A, and three gaps on the
B of Medicare. So let's review the gaps where the liabilities that you have in original
Medicare. So on the A side of Medicare, if you go to the hospital notis days 1 to 60,
you're responsible for a deductible. That's $1,408 this year. This deductible can be paid
more than once in a year. If a person is hospitalized, then discharged and 60 days goes by and they're
not rehospitalized, but they’re rehospitalized after 60 days of their discharge date, then
that deductible would be payable again if they are hospitalized that same year. And
so that is not an annual deductible.
It's called a benefit period deductible. So the point is that's your first liability when
it comes to Medicare Part A. Now, if you happen to be in the hospital longer than 60 days
and by the way, it's pretty rare, but the first 60 days, that's all you pay. But after
that, Medicare says they will provide 90 more days of insurance for you, but you now have
to pay a daily copay. So month three, you pay a $352 a day co-payment. Month four and
month five, you pay a $704 a day copay. And that means that's $10,500 that you owe for
month three, and $21,000 for month four, and $21,000 for month fine. So these are called
extended stays. They are very rare, but that's how they're billed when they occur. So that
is your second gap, these extended hospital daily co-pays. The final gap on the A of Medicare
is skilled nursing. And Medicare says if you are in the hospital a minimum of three days,
so we're in the hospital minimum three days, then the doctor can put us in a skilled nursing
facility, and the first 20 days they will cover all the expenses as long as we had the
three day stay. Now, if we're in the hospital three days, we're going to a skilled nursing;
first 20 days, Medicare pays everything.
But after that, notice days 21 to 100, now we have daily copays of $176. So these are
your liabilities. These are the things that you would have to pay out of pocket on the
A of Medicare. Now let's talk about the B of Medicare. B is pretty much everything outpatient
related. And so again, we have three gaps. If you're using the B services, this would
be doctor services, this would be outpatient surgery, durable medical equipment, those
kinds of things. We have a deductible of $198. Now, it's not like this deductible here where
this can occur multiple times in the year. This only happens once a year, and it's a
calendar year. So if you start Medicare July 1, then this is your deductible through 12/31.
And then this deductible will reset every January. Sometimes when they reset, it goes
up a little bit. Sometimes it's the same from year to year. All right? But you're responsible
for the deductible. After that deductible is met, now, Medicare is going to pay 80 percent
of the bill and you're going to pay 20 percent. So your percentage, your 20 percent is called
coinsurance. Now, the problem with your 20 percent folks is this: it is totally, totally
unlimited. Right? In other words, that 20 percent never, ever, ever stops unless we
get insurance to stop it. And then the last gap is called an excess charge.
And this is when you see a physician that will not take Medicare approved reimbursement
amounts as payment in full. They want more. They want extra. And when they add to the
bill, that is called an excess charge. Now, the most they can add is 15 percent. But when
they do it, you're responsible to pay for that. All right? And so these are six gaps
in original Medicare. These are things that you're liable for.
So the majority of people that will look at these gaps will say, I'm not comfortable with
that amount of liability. And so what they will do is they will take those liabilities,
either some of them or all of them. They'll take the liability and then will transfer
that to an insurance company, and they will get a supplemental plan or a Medigap policy
to fill these particular gaps. All right? So let's talk about the plan G. When you have
a G plan, the G plan will actually pay five of the six gaps that I just reviewed with
you. They'll pay five of them. The G plan will pay the A deductible, it'll pay all your
co-pays, plus, will actually give you a whole nother year in the hospital at no cost to
you whatsoever. OK, that’s here. The G plan will also pay your $176 copay if you happen
to be in the skilled nursing facility more than 20 days. So G will fill in all the gaps
on the A. Now over on the B side, the G will cover your coinsurance 20 percent. Remember,
it's unlimited. It will pay 100 percent of your coinsurance. It will also pay excess.
So if you happen to go to a physician that adds 15 percent to the bill, that G plan will
also pay that. So the one thing that will not pay for you is the B deductible. Now,
this year in 2020, that is $198, which means if you have a G plan, the$198 of anything
on the outpatient side, anything billed to you you'll pay the first $198. That could
be a couple of doctor visits, it could be maybe $198 of an MRI, $198 of cataract surgery,
but the first $198 for the year is going to be your responsibility. Then after that you
truly have a full coverage plan. All right? And so that is the way the G plan is going
to work.
Now let's compare that to the N plan. So we saw that the G plan paid five of the six gaps.
Now, if we decide to buy an N plan, it's only going to cover four of the six gaps. So the
N plan covers four of the six gaps. Now, the N and the G truly are identical on the hospital
site.
The N plan will pay your deductible, it will pay your daily co-pays if you have extended
hospital stays, and will also give you a whole nother year in the hospital at no cost to
you. It also will pay your $176 co-pays if you're in the skilled nursing facility more
than 20 days. So truly on this side of Medicare A, the G and the N are identical. Here's where
it's going to differ, though. The N plan will pay your 20 percent coinsurance, which is
again totally unlimited in original Medicare, but the N will cover that full amount of 20
percent. But the N plan will not pay your B deductible, so this will be out of your
pocket, and the N plan is not going to pay excess charges whenever that occurs. So, again,
this is really a minor amount. Once a year, you're going to have to pay the $198. That
first $198 that comes to the B services. Now this right here on the excess charge. Now
the probability of that today, they tell us right now that about 1 out of 10 doctors are
going to do this. 9 out of 10 do not. However, that certainly can change. But if you ever
go to a doctor, for instance, all the docs at Mayo Clinic do this and other specialties
as well. But the point is that 15 percent, if it ever occurs, you're going to have to
pay that.
So, again, the N plan is going to pay four of the six gaps where G is going to pay five
of the six gaps. In addition to you being responsible for the B deductible as well as
expense charges when they occur, N plan also, notice, has twenty dollar doctor visit copays,
as well as a fifty dollar copay any time you go to the emergency room. And so any kind
of physician you would see a primary care doctor, a specialist, if you went in for therapy.
But every time you would see a doctor, you're going to be responsible for twenty copay,
and the E.R. of course, fifty dollars. So that's in addition to you being responsible
for those two gaps on the B side. All right? So let me just talk now about the differences
as well. Number one, there will definitely be a premium difference. You're going to see
that the N plan is going to be a little bit lower. Why? Because you took on a little bit
more of the risk, and that typically in most markets throughout the country is going to
be about a 20 dollar less premium on the N plan versus the G plan. All right? So you're
going to save about two hundred and forty dollars. And in regards to that, you're going
to have to evaluate is it worth that two hundred forty dollars a year and savings for you to
take on the risk of excess.
Remember right now, 1 out of 10 doctors will charge excess. But over time that could grow.
And most of you doing this today have a life expectancy somewhere between 85 to 90 years
old. So you're going to be on Medicare probably a good 20, 25 years, maybe longer. And so
we could begin to see more and more doctors charging excess. And if you take an N plan,
you will always be responsible for the excess charges. Again, you're going to have to evaluate
that to see if that two hundred forty dollars a year is worth it. Plus, you don't know what
your health is going to be in the future. So every time you see a doctor, you've got
that copay, of course, that you'll be responsible for as well. So you have to decide whether
240 is worth it or not. And then lastly, another risk that you have if you decide I think I'm
going to go with the N plan because I want to save that two hundred forty dollars a year,
you also have to realize that you have the risk of switching, meaning there may come
a point in time when you can't switch. So many people think when we have the open enrollment,
they can just very freely switch from the G to N or N to G and they can just move around.
That's not the case because folks, what happens is once you start your Medicare B, what you
have, I'm saying you've retired, you've taken Medicare B, you have six months from your
Medicare B date, let's say your Medicare B date is July. Watch what happens. July, August,
September, October, November, December. That's my six months if I started my Medicare July
1, all the way through the year. But notice what happens: January 1 of that following
year now, my six months is up. And any time I'd ever want to switch a plan in most states,
if I want to move from an N to a G, now you're going to have to medically qualify. So you
do run the risk that if your health were to change, and you're on that N plan longer than
six months, that you may have to stay on that plan, therefore, being responsible for the
B deductible, the excess charges, as well as co-pays to the doctor and E.R. for the
rest of your life. And again, you may be comfortable taking on that amount of risk, but that really
ultimately is the difference between the G and the N. How much risk do you want to take
in regards to your Medicare? And if you can save some money here, is it worth that amount
of risk? And again, there is no right or wrong decision in that world. Different, you've
got to decide. But those are the differences between the G and the N plan.