Page 2 - Cover Letter and Medicare Evaluation for Eric Hartman

As mentioned, Medigap policies’ downside is their cost. You will probably pay about $3,000 a
year to get a comprehensive Medigap policy like Plan G, and that doesn’t include Part B
premiums, Rx drug expenses, and costs for services that Medicare does not cover. And since
Medigap policies do not cover prescription drugs, policyholders must also enroll in a Medicare
prescription drug plan (a stand-alone drug plan).

How Medicare Advantage plans work

When people enroll in Advantage plans, Medicare assigns their benefits to the plans. The plans
then assume responsibility for the enrollees’ medical care. Medicare pays the plans a monthly
amount to provide this care (the amount is based on the enrollee’s age, pre-existing conditions,
and local costs of care). As an example, Medicare might pay the plan $1,000 a month for an
individual’s medical care. If that individual doesn’t need medical care in a particular month, the
plan comes out $1,000 ahead. But if that individual needs a $10,000 medical procedure, the
plan will receive only $1,000 plus any premiums and co-payments it collects.

Advantage plans therefore try to keep medical costs low and to limit expensive treatments,
perhaps saying they are not medically necessary. To attract new enrollees, the plans use the
$1,000 monthly payments (in this example) to reduce or eliminate plan premiums and to
provide benefits not covered by traditional Medicare. Most Advantage plans offer some
coverage for dental care, routine vision care, and hearing aids, none of which Medicare covers.
And the costs for prescription drugs are typically lower in an Advantage plan than in a stand-
alone drug plan (which you must enroll in if you get a Medigap policy).

Advantage plans must comply with Medicare’s coverage requirements, and they cannot deny
coverage for something that Medicare covers. But they can charge higher co-payments for
some services and low or zero co-payments for others. Expensive treatments often require 20%
co-payments, which is no better than traditional Medicare offers. And in Advantage PPO plans,
some out-of-network treatments may require a 30% or 40% co-insurance payment.

Advantage plans can be great bargains for healthy people who do not need costly treatments.
During the past 15 years or so, Advantage plan enrollment has grown rapidly, and today almost
one-half (48%) of all Medicare enrollees are in Advantage plans. For people with health issues,
however, Advantage plans can turn out to be restrictive.

Comparing the two Medigap plans

The two Medigap plans compared in your evaluation are Plan G and Plan N. The benefit designs
of all 10 Medigap plans are shown on pages 6-7 of the evaluation. Here are brief summaries
Plans G and N:

1) Medigap Plan G. This plan covers all of Medicare’s gaps except for the Part B deductible
($226 in 2023). So, after you’ve paid the deductible, during the year you won’t have any
co-payments for medical services that Medicare covers. Plan G also includes some
coverage for foreign travel medical emergencies, which Medicare does not cover. I’m

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