Medicare Plan N is a supplemental insurance policy that pays many of the out-of-pocket costs seniors would otherwise be on the hook for after a hospital stay. Medicare Part A helps pay the costs of admission to a general hospital, skilled nursing facility, or hospice care home. In 2020, Part A beneficiaries are required to pay an annual deductible of $1,408 before benefits can be paid, after which Medicare can pay 80% of routine inpatient costs. Part A can pay for many normal expenses, but several items can add out-of-pocket costs to the bill seniors have to pay. This can include X-rays and MRIs, some drugs administered in the hospital setting, and certain types of specialist care.
Plan N helps out with these costs by paying 75% of the charges not covered by Part A. To understand this, imagine you spend a few days in the hospital and generate the average invoice of $16,000 in hospital charges. If you have Plan N, then 75% of your $1,408 deductible is paid for, saving you $1,056. On top of that, the $14,592 that’s left after you’ve paid your deductible is paid up to 80% by Part A, with 75% of the remaining $2,918.40 paid by Plan N. In the end, the total cost of this care to you would be $1,081.60 in combined deductible and hospital fees.
This fee structure can get complicated, but an easy way to picture what Plan N covers is to imagine you have your deductible paid down, and then figure you will owe 5% of any Part A charges your care generates. Thus, a $1,000 MRI you get while in the hospital after your deductible has been paid should cost you just $50 out of pocket.
Seniors who carry Plan N as a supplemental policy also have travel benefits that help to protect them when they travel overseas. Plan N, like the very similar Plan M, pays up to 80% of your medical bills if you need care while you’re traveling in a foreign country where you cannot get Medicare-funded treatment, and a U.S. hospital is not the closest care facility.
Plan N doesn’t help with every medical expense you might incur. Medicare Part B pays 80% of beneficiaries’ outpatient care costs, such as those for ambulance rides and home care services. Plan N does not provide any coverage at all for Part B expenses, nor does it help cover Part D prescription drug costs. Other Medigap plans may be able to help you manage the costs of these services, and it’s a good idea to talk over your options, at no cost, with a licensed insurance agent before you decide on a plan.
Typically, seniors can buy a Plan N policy when they become eligible for Original Medicare. Eligibility begins when you reach age 65, provided you’re a U.S. citizen or permanent resident with at least five years of residency in the country. To get Part A at no monthly cost, you must have at least 10 years, or 40 quarters, of work history in which you paid into Social Security. If you worked less than that, you could still take advantage of Part A benefits, though you may be charged a monthly premium. You may also be eligible for Medicare after 24 continuous months of receiving SSDI for a diagnosed disability.
You can enroll in a Plan N Medigap policy by reaching out to an insurance carrier in your state that offers Medicare supplementals. Many states require authorized insurers to provide at least one of these plans, which can generally be compared side by side on your state’s health insurance marketplace. Usually, seniors become eligible for a Plan N policy when they become eligible for Original Medicare. Seniors can sign up for both Part A and a supplemental starting on the first day of the third month before their 65th birthday. Medicare recommends applying for coverage as early as possible, as there’s often a delay in benefit activation that can cause a temporary gap in coverage.
When you enroll in a Medicare, Medicare Advantage, or Medigap plan, you’re entitled to be offered the best possible monthly premium for your geographic area. If you apply for coverage during one of Medicare’s open enrollment periods, you cannot be turned down for coverage due to your pre-existing conditions or current health habits. This is not true of sign-ups that take place outside of the enrollment periods, when normal underwriting practices may result in a penalty rate for late sign-ups or, possibly, a denial of coverage. Medicare offers beneficiaries the chance to sign up during three periods: initial, annual, and special enrollment.
Initial enrollment is the first open enrollment period you’re likely to pass through, and it’s when most people first sign up for Medicare. Initial enrollment begins on the first day of the third month before your 65th birthday and ends on the last day of the third month after it. Thus, if you were born on August 15, your initial enrollment period begins on May 1 and ends on November 30 of the year you turn 65.
Medicare’s annual enrollment period begins each year on October 15 and ends on December 7. During this period, you can sign up, cancel, and switch your Plan N coverage without penalties or underwriting of your policy. Three states, Massachusetts, Minnesota, and Wisconsin, require in-state insurance providers to maintain open enrollment terms year-round, and if you live in one of these states, you must be charged a group rate that’s the same for every senior in your area.
Special enrollment periods operate much like the other open enrollment periods, except that they apply only to you as an individual and last 67 days from a qualifying event. Qualifying events usually begin when you lose your existing health coverage through no fault of your own, such as when your insurer goes bankrupt or cancels your group’s insurance policy. You may also begin a SEP if you lose the health coverage you had through your or your spouse’s employment. Note that COBRA benefits don’t count as employer-provided health insurance for the purpose of establishing a SEP. Other events that can count as a qualifying SEP include a return from overseas, release from an institution, canceling your Medicare Advantage plan within 12 months of signing up, or retiring from your job.
No. Plan N, like all Medigap policies, applies only to individuals. Married couples may share Medicare eligibility and work history credit for eligibility purposes, but each Medigap policy is single-person only. It is possible for one partner in a marriage to have Plan N with Original Medicare, while the other carries Medicare Advantage, but each person holds an individual plan that applies only to them.
No. Medicare Advantage plans are not compatible with Medigap coverage, and federal law prevents insurers from offering both types of plans to the same customer. You can change from Medicare Advantage to Original Medicare with a Plan N supplement during an open enrollment period.
Yes. Medicaid is a low- or no-cost health insurance policy for beneficiaries with low incomes. Used as a Medicare supplement, Medicaid can cover most of the expenses Original Medicare leaves unpaid, though income and asset limitations apply. Some states allow Medicaid to claim reimbursement from the estates of seniors who have used benefits before passing, which can affect inheritance and property issues.
Yes. Federal law permits Medigap customers to try plans on a temporary basis. During this “free look” period, Plan N customers have the option to try a new Medigap plan for up to 30 days without penalty. You do, however, have to pay both premiums during the month you hold both policies.
No. Medigap plans only provide supplemental payment assistance for existing Medicare plans. No Medicare plan currently offers eye exams or dental coverage, though some Medicare Advantage plans do offer these features as extra benefits.