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Medicare in New Jersey

New Jersey ensures access to Medigap Plan D for beneficiaries under age 65

Key takeaways

How many New Jersey residents have Medicare plans?

As of July 2020, Medicare enrollment in New Jersey was  1,630,762 residents. Most of them — 87 percent — are eligible for Medicare due to their age (i.e., being at least 65). The other 13 percent are eligible for Medicare coverage enrollment due to a disability that lasts at least 24 months, or a diagnosis of ALS or end-stage renal disease. Nationwide, 85 percent of enrollees use Medicare benefits due to age, while 15 percent are eligible due to disability.

Medicare options

Medicare beneficiaries can chose among several options to access Medicare coverage. The first choice is between Medicare Advantage, where an individual enrolls with a private health plan that is under contract with the federal government to provide Medicare coverage, or Original Medicare, where coverage is paid for directly by the federal government. Medicare beneficiaries also have options around Medigap policies and Medicare Part D (prescription drug) coverage.

The governance of Medicare Advantage and Part D plans mostly lies with the federal government, although states are responsible for licensing the insurers and ensuring financial solvency. Medigap plans must comply with federal rules for standardization, but states have more direct oversight over these plans.

Original Medicare includes Part A (also called hospital insurance, which helps pay for inpatient stays at a hospital, skilled nursing facility, or hospice center) and Part B (also called medical insurance, which helps pay for outpatient care like a doctor appointment or a preventive healthcare service, such as most vaccinations). Medicare Advantage plans bundle Parts A and B under a single monthly premium and often include other services like prescription drugs and vision coverage.

Private Medicare Advantage plans are an alternative to Original Medicare. There are pros and cons to either option, and the right solution is different for each person.

Medicare Advantage in New Jersey

The majority of New Jersey Medicare beneficiaries are enrolled in Original Medicare, but Medicare Advantage enrollment has been steadily growing since 2004.

As of 2018, about 22 percent of Medicare beneficiaries in New Jersey had coverage under Medicare Advantage plans. Nationwide, the average was 34 percent, so Medicare Advantage enrollment is less popular in New Jersey than it is nationwide. The other 78 percent of New Jersey’s Medicare beneficiaries opted instead for coverage under Original Medicare. But in keeping with the nationwide uptick in Medicare Advantage enrollment, 32 percent of New Jersey Medicare beneficiaries were enrolled in Medicare Advantage plans as of mid-2020 (versus a nationwide average of 40 percent of Medicare beneficiaries enrolled in private plans).

There are 21 counties in New Jersey, and the availability of Medicare Advantage plans for 2020 ranges from 11 plans in Cape May County to 43 plans in Morris and Union counties.

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Medicare beneficiaries can enroll in Medicare Advantage plans when they’re first eligible for Medicare or during the annual open enrollment period in the fall, which runs from October 15 to December 7 each year. There is also a Medicare Advantage open enrollment period each year (January 1 to March 31) during which people who are already enrolled in Medicare Advantage plans can change to a different Medicare Advantage plan or drop their Medicare Advantage plan and enroll in Original Medicare instead.

Medigap in New Jersey

Medigap plans are used to supplement Original Medicare, covering some or all of the out-of-pocket costs (for coinsurance and deductibles) that people would otherwise incur if they only had Original Medicare on its own.

There are 27 insurers that offer Medigap plans in New Jersey as of 2020.

Medigap plans are standardized under federal rules, and people are granted a six-month window, when they are at least 65 and enrolled in both Medicare Part A and Part B, during which coverage is guaranteed issue for Medigap plans. However, federal rules do not guarantee access to a Medigap plan if you’re under 65 and eligible for Medicare as a result of a disability.

But New Jersey is among the majority of the states that have adopted rules to ensure at least some access to Medigap plans for enrollees under the age of 65. And New Jersey goes further than many other states by also ensuring that people under age 65 don’t pay higher premiums for their Medigap coverage (in many states where Medigap plans are guaranteed issue for those under 65, the premiums are still higher because insurers know that disabled enrollees are likely to incur higher costs).

New Jersey’s consumer protections for disabled Medigap enrollees include provisions for those under age 50, and for those age 50-64. In both cases, as long as the person applies for a Medigap plan (Medigap Plan D, as of 2020) within six months of enrolling in Medicare Part B, the coverage is guaranteed issue and the price won’t be more than the insurer charges for enrollees who are eligible for Medicare due to their age (as opposed to a disability). But younger applicants only have one insurer option, while older applicants can select from any Medigap insurer in their area:

  • For Medicare beneficiaries who are under age 50, coverage is guaranteed issue only with the state’s contracted carrier (Horizon Blue Cross Blue Shield of New Jersey) and the available plan is Medigap Plan D (it was Plan C prior to 2020). The state runs a program so that all carriers that offer health benefits in New Jersey share in the Medigap losses incurred by the contracted carrier for these enrollees.
  • For Medicare beneficiaries who become eligible between the ages of 50 and 64, coverage for Plan D (it was Plan C prior to 2020) is guaranteed issue with any insurer in New Jersey that offers Medigap plans. And insurers must maintain loss ratios of at least 65 percent for individual policies and 75 percent for group policies.

Under federal law (MACRA) that was enacted in 2015, Medigap Plans C and F can no longer be sold to people who become eligible for Medicare on or after January 1, 2020. So New Jersey enacted legislation (S.3651) in 2019 to align the state’s existing law with the new federal requirements. As of 2020, Plan D is the guaranteed-issue Medigap plan for disabled Medicare beneficiaries in New Jersey, instead of Plan C.

In 2019, lawmakers in New Jersey also considered legislation (A.4834 and S.2895) to provide continuous guaranteed-issue Medigap rights to Medicare beneficiaries who are at least 65 years old, but neither bill advanced in the legislature. The current rules (which mirror federal requirements and were not changed in the 2019 legislative session in New Jersey) only grant people a one-time six-month window during which they can pick a Medigap plan with guaranteed-issue rights. People who miss that window or pick a less-than-ideal Medigap plan are often unable to pick a different plan later on, because insurers can use medical underwriting to determine eligibility for coverage after that one-time enrollment window closes.

New Jersey Medicare Part D

While not a covered benefit under Original Medicare, coverage for outpatient prescription drugs via a Medicare Advantage plan (MA-PD), an employer-sponsored plan (offered by a current or former employer), or a stand-alone prescription drug plan (PDP).

As of mid-2020, there were 898,207 Medicare beneficiaries in New Jersey who were enrolled in stand-alone Part D prescription drug plans. That number has been falling though — it was above 913,000 at the end of 2019 — due to increasing enrollment in Medicare Advantage plans, most of which include integrated Medicare Part D prescription coverage. Total enrollment in Medicare Part D in New Jersey, including stand-alone plans as well as Part D coverage integrated with Medicare Advantage plans, stood at 1,236,230 as of mid-2020, and that number has been steadily increasing along with the overall increase in Medicare enrollment.

New Jersey does still have higher than average enrollment in stand-alone Medicare Part D plans, with about 55 percent of the state’s total Medicare population enrolled in stand-alone Part D plans, versus about 40 percent nationwide. That makes sense when we consider that Medicare Advantage enrollment is lower than average in New Jersey, and Original Medicare enrollment is higher than average (most people with stand-alone Part D plans buy them to supplement Original Medicare, since most Medicare Advantage plans include Part D coverage).

For 2020 coverage, there are 28 stand-alone Part D plans available in New Jersey, with monthly premiums ranging from $13 to $116.

Medicare Part D enrollment is available when a person is first eligible for Medicare and during the annual open enrollment period in the fall (October 15 to December 7, with coverage effective January 1).

Medicare spending in New Jersey

In 2018, according to data standardized to account for regional variations in payment rates, Original Medicare spent an average of $10,793 per beneficiary in New Jersey. This was only based on Original Medicare spending, so it did not include costs for Medicare Advantage enrollees. The national average that year was $10,096 per enrollee, so spending for Medicare in New Jersey was 7 percent higher than the national average. On the high and low ends of the spectrum, per-enrollee Medicare spending in Louisiana stood at $11,932 in 2018, and was only $6,971 in Hawaii.

How does Medicaid provide financial assistance to Medicare beneficiaries in New Jersey?

Many Medicare beneficiaries receive financial assistance through Medicaid with the cost of Medicare premiums and services Medicare doesn’t cover – such as long-term care.

Our guide to financial assistance for Medicare enrollees in New Jersey includes overviews of these programs, including long-term care coverage, Medicare Savings Programs, and eligibility guidelines for assistance.

Helpful resources for New Jersey Medicare beneficiaries and their caregivers

These resources provide free assistance and information about Medicare programs and availability in New Jersey.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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