As I understand it, the pre-payment of any months you still have left gets credited to the payment of your new plan.
E.g. You have four months left,
4 months of $9.95 = $39.80,
The 2 year plan is $190.80,
You pay $190.80 - $39.80 = $151.
So in total you've payed $119.40 for the first pre-payment, plus $151 for the 2-year prepayment, which leads to $270.40. That is the same as $190.80 (2-pre) + $79.60 (8 months of $9.95).
I'm not sure how it would work for discounted prices though.