Two New Medigap Plans to Consider

I understand that two new types of Medicare-supplement policies will be introduced on June 1 and that other changes will be made to policies then. Do I need to do anything to keep my current medigap coverage?

No. Starting June 1, two new medigap plans, M and N, will be introduced, and insurers will no longer sell plans E, H, I and J. If you currently have a policy, even if it’s Plan E, H, I or J, you can keep it and your coverage won’t change.

But no matter what plan you have, it may be worthwhile to consider the new plans, which add some cost-sharing in return for lower premiums.

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Both of the new plans are similar to the most popular medigap policy, Plan F. However, Plan M provides only 50% of the Medicare Part A deductible (which is $1,100 in 2010) and none of the Part B deductible ($155). Also, Plan M does not provide coverage for Part B “excess charges,” which helps pay the difference if your doctor charges more than Medicare allows.

Plan N is the same as Plan M, except that it covers the $1,100 Part A deductible in full, and it charges a $20 co-payment for doctors’ office visits and a $50 co-payment for emergency-room visits. Plan N, which is being offered by more insurers than Plan M, tends to cost 25% to 35% less than Plan F, says Chris Hakim, of eHealthMedicare.com, a marketplace for medigap policies run by eHealthInsurance.com.

When determining whether to switch plans, look at savings on premiums as well as potential out-of-pocket costs. Plan N may cost a lot less than Plan F, for example, but you’d have to pay the $155 Part B deductible with Plan N plus the $20 co-payment for doctors' office visits and a $50 co-payment for emergency room visits. Add up the potential co-pays and calculate how many times you could visit the doctor or emergency room and still come out ahead. Also, keep in mind that Plan F covers Part B “excess charges” but Plan M and Plan N do not, which could make a big difference if your doctors charge more than Medicare allows.

If you’re within six months of signing up for Medicare Part B for the first time, you can qualify for any medigap policy regardless of your health. If you don’t sign up during that open-enrollment period (or switch plans), you could be rejected because of your health. Some insurers are offering Plan M and Plan N regardless of health, especially to people who have plans E, H, I or J.

For more information about medigap policies and the changes taking effect on June 1, see the 2010 Choosing a Medigap Policy guide at Medicare.gov.