Medigap Plan J
Medicare Supplement Plan J, or more popularly known as Medigap Plan J, was one of the most popular plans until it was discontinued on June 1, 2010. That's because The Medicare Modernization Act was passed, and sales of Medigap Plan J was stopped. The reason why this plan is no longer being offered is because of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 went into effect. Why was Medigap Plan J so popular? What did it offer that other plans didn’t? If you still have Plan J should you change to a new plan? Read on to find out more.
What was Medigap Plan J?
In order to understand Medigap Plan J, we need to understand Medicare first. Medicare provides medical coverage to people across the United States. Medicare consists of Medicare Part A and Part B.
What does Medicare Part A cover?:
- Hospital care
- Skilled nursing facility care
- Nursing home care
- Hospice care
- Home health services
Medicare Part B covers the following:
- Ambulance services
- Durable medical equipment
- Mental health
- Partial hospitalization
- Getting a second opinion before surgery
- Limited outpatient prescription drugs
Medicare Part A and B cover a lot of the basics. Unfortunately, they have deductibles and copays that can be quite costly if you become ill. That’s where Medigap Plan J stepped in to fill in the gaps. So, what did Medigap Plan J cover?
Medigap Plan J covered the following:
- Coinsurance and hospital stay up to 365 days after Medicare benefits are used up
- Part B coinsurance or copayment
- Blood (first 3 pints)
- Hospice Care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B excess charges
- Foreign travel (up to plan limits)
- Preventive care ($120 per year)
- At home recovery ($1600 per year)
- Most notably, there was a prescription drug benefit.
As you can see, Medigap Plan J offered additional coverage such as for foreign travel (Medicare Part A and B can only be used if you are in the United States). It also enhanced Medicare Parts A and B by providing coinsurance and copayments for both plans. And most of all, it had some drug plan coverage. It’s no wonder that Medigap Plan J was so popular.
If that’s the case, why did they stop offering it?
The Prescription Drug Benefit was found to be too expensive relative to its benefit, and so Congress changed it.
Because of its high cost relative to its benefit, less than one in ten Medicare beneficiaries purchases a
Medigap plan with prescription drugs. Three of the ten standardized Medicare supplemental plans,
(plans H, I, and J) include prescription drug coverage. All three plan types have a $250 deductible for the
drug benefit and require 50 percent coinsurance. The H and I plans have a cap on drug benefits of $1,250 while
the J plan caps the benefit at $3,000. The typical premium for a plan with the lower cap costs about $90 per
month or $1,080 per year.1
Medigap Plan J Is Now Obsolete
Going back to what we discussed earlier, Medicare Part D covers prescription drugs, making the drug coverage inside Plan J obsolete. Medicare now also covers preventive care and at-home recovery. Since Medicare now covers preventive care and at-home recovery, there’s no need for Medigap Plan J to cover this. Medigap Plan F covers everything that Plan J covered, with the exception of the unnecessary benefits of preventive care, at-home recovery, and the more robust prescription drug benefits you can get with Part D. Medigap Plan J offered duplicate and unnecessary coverage, so is now obsolete. Additionally, Medigap Plan G covers everything that Plan F covers, with the exception of Part B deductible. This deductible in 2018 is $183 per year.
What Do I Do With My Medigap Plan J?
If you’re enrolled to Medigap Plan J and wonder if you’re still covered, no need to worry. Expired ongoing plans are still honored and you are still covered. All the policies and benefits you signed up for are still intact. Only the new sales of Plan J have been stopped.
The disadvantage of keeping your Medigap Plan J is that premiums will continue to go up. Since no new sales for Medigap Plan J are coming in, the existing policyholders are getting older. Because the current plan participants are getting older, and sicker, claims are rising. Some will switch to a different policy or pass away, shrinking the number of existing policyholders. Insurance companies have no choice but to raise premiums for existing policyholders since there are no new healthy customers coming into these old plans.
Now you can get very similar benefits to Plan J simply by moving your plan to Plan F or Plan G. Keep in mind that Plan F will be discontinued for new Medicare beneficiaries in 2020. Because of this, and the price differential between a Plan F and Plan G, you might want to consider Plan G, which offers all the same benefits as Plan F except that it does not pay the Part B deductible (currently $183 in 2018). With the price differential between Plan J, Plan F, and Plan G, it often makes financial sense to go with a Plan G. If you'd like us to check for you, fill out the Quote Request form.
Should I Switch Plans?
Medicare Part D offers better prescription drug plan coverage than the former Plan J drug coverage. And Medicare plugged the other holes that Plan J covered (that Plan F didn't cover). Paying a smaller premium is also a very good reason why you should consider switching to Medigap Plan F now, while you have the opportunity.
If you’re happy with your existing Medigap Plan J and are willing to pay the premium, then there’s no need to switch policies. But it would be wise to shop around to see if you could save money each month by moving from a Plan J to a Plan F. There’s no point in spending more for a plan that another plan can cover at a more affordable price.
However, if you are willing to pay a small deductible, you'll likely save even more money by moving to a Plan G.
Here's how to see if switching to a Plan G is a financially good deal:
- Take your current monthly premium for Plan J
- Subtract the monthly premium for Plan G
- Multiply that by 12
- Then subtract the current Part B deductible
So here is an example:
- $333.58 – 204.57 = $129.01
- 129.01 x 12 = $1548.12
- $1548.12 – $183 = $1365.12
If you don’t need full coverage and you’re working within a budget, there are other Medigap policies that you can avail. Medigap plans range from A, B, C, D, F, G, K, L, M, and N. Visit the Medicare website at https://www.medicare.gov/ to find out all the policies and coverages. Contact us to get the best deals and best policies suited to your needs.
Now You Know
The coverage Plan J offered was one of the best at the time and defined what full coverage was. But with the addition of Part D and updates to other policies, we can still take advantage of what Medigap Plan J used to cover. Medigap Plans F and G are great alternatives. Both certainly fills the holes that Medicare Plan A and B do not cover. Start looking for other plans and policies that will suit your needs and budget.
Most of us have already said goodbye to Medigap Plan J. Those of us who still have Plan J might find that we can save money by simply moving our coverage to a Plan F or G.
- MEDIGAP PRESCRIPTION DRUG COVERAGE, MEDIGAP PRESCRIPTION DRUG COVERAGE, https://clintonwhitehouse2.archives.gov/WH/New/html/Medicare/DrugCoverage/document/3-medigap.html