Page 4 - Cover letter and evaluation for Lee Palmiter

And if you choose this plan, you won’t have to worry about a shrinking policyholder
base ten years from now.

3) Medigap Plan N. This plan has become increasingly popular in the past couple of years
because it is less expensive but still has fairly comprehensive benefits. After cost-
sharing, omeone in fairly good health will likely save $200 or more a year in total costs
in this plan, whose annual premiums are estimated to be $1,600.

4) Medigap High-Deductible Plan F. Because you currently are in a high-deductible plan,
this plan might be of interest to you because of its low premiums. In 2019 after you’ve
met this plan’s $2,300 deductible, you won’t have any more cost-sharing for Medicare-
covered services. Since Medicare pays the first 80% of most doctors’ bills, you will pay
the 20% balance until the deductible is met. To reach the $2,300 deductible, then, you
would have to incur more than $10,000 in Part B costs.

Probably the single largest out-of-pocket risk in this plan is the Part A deductible that
you would pay if you were hospitalized. In 2019, the Part A deductible is $1,364, and
you would owe that full amount unless you had already satisfied the deductible.

The people who fare best with the High-Deductible version of Plan F are those who do
not use a lot of medical services. Insurance companies know that the people who
typically choose this plan are in good health, and so in some cases the premiums are set
lower than the actuarial value of the benefits. I’ve estimated the annual premiums are
$900, but you may find a company that sells this plan for less than that.

There are a couple of things to be aware of in choosing this plan. One is that if you later
want to upgrade to a more comprehensive plan, you will need to answer questions
about your health and pre-existing conditions. Another consideration with Plan HDF is
that as people age and use more medical services, there’s a greater chance that their
out-of-pocket costs will outweigh the premium savings. Still, over the course of a
retirement many people save substantial amounts in this plan.

The pricing of Medigap policies

During the first six months that someone is enrolled in Part B, he or she has a guaranteed right
to get a Medigap policy without answering questions about health or pre-existing conditions,
although in New Jersey premiums will be adjusted for age and gender. And if they choose a less
comprehensive plan like High-Deductible F and later want to upgrade, they will have to disclose
pre-existing conditions and could be turned down.

Even so, many individuals in the late 70s and 80s acquire their first Medigap policy without
substantial premiums adjustments, although occasionally they will be charged higher premiums
or denied coverage.

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