Page 1 - Cover Letter and Cost Estimates for Ms. LaVerne Durham

August 6, 2021

Ms. LaVerne Durham
Montgomery County, MD

Dear Ms. Durham:

Based on the Rx drugs you take and the coverage options available to you, it would cost you
about $4,000 if you were enrolled in Medicare for all 12 months this year. That includes Part B
premiums, Medigap premiums and co-pays, and your Rx drug costs, including premiums and
co-payments.

That estimate does not include costs for dental, routine vision, and hearing benefits, none of
which are covered by Medicare (although some Advantage plans include dental/vision benefits,
often for an added premium).

When you turn 65, assuming you do not have an employer retiree health plan to supplement
Medicare, you will need to choose one of the following two types of coverage (in addition to
enrolling in Part A and Part B):

1) A Medicare Advantage plan that includes prescription drug (Part D) coverage;

Advantage plans are managed-care plans – primarily HMO’s and PPO’s. If you enroll in an
Advantage plan, Medicare assigns your coverage to the plan and pays the plan a monthly
amount for your care (the amount varies depending on the enrollee’s age, health and local
medical costs). The Advantage plan is responsible for your care and is required to cover the
same services that Medicare does, but it can charge lower or higher co-payments than you
would pay in traditional Medicare.

In general, Advantage plans are attractive because of their low premiums and in some cases
benefits that Medicare does not offer, such as dental and routine vision care. But they can be
risky choices when they have have high out-of-pocket limits. Individuals in good health may
accept this greater risk as a tradeoff for the low premiums/extra benefits – as with home or
auto insurance, someone will accept a higher deductible to get a lower premium.

2) A Medigap policy combined with a stand-alone drug plan.

Unlike Advantage plans, Medigap policies are secondary coverage. As an example, Medicare
will usually pay the first 80% of the cost of your doctor’s office visit and then forward the 20%
balance to the secondary insurer – the Medigap insurance company -- to pay some or all of the