Page 3 - Cover letter and evaluation for Darlene Hoover

services that the plan covers. Plan L, for instance, does not cover the $185 Part B
deductible, and so any payments that you make toward the Part B deductible will not
count toward the plan’s OOP limit. Aside from the Part B deductible, however, Plan L
covers the most important Medicare-provided services – hospitalization, doctors’ costs,
and so forth, as shown on pages 6-7 of the evaluation.

For Part B costs, Plan L covers 75% of Medicare’s 20% gap. That means that if you have
a $200 doctor’s office visit after you’ve met the Part B deductible, Plan L will 5% of the
total cost (or 75% of the gap). Therefore in this example you would pay $10 for a $200
visit.

Medicare’s single largest gap is the $1,364 Part A deductible, and Plan L covers 75% of
that gap, leaving you with a $341 payment if you were hospitalized and had not yet
reached the plan’s out-of-pocket limit.

Plan L’s downside is that it is not sold by many insurers, and so its market is less
competitive than for the more comprehensive/expensive Medigap plans that generate
higher commissions (the same is true of the high-deductible version of Plan F in your
husband’s evaluation). In your evaluation I’ve assumed you would pay $1,050 a year in
Plan L premiums. In most cases, your Medigap premiums will be somewhat lower than
your husband’s – that’s because he’s a few months older and because many insurers
have lower premiums for women than they do for men of the same age.

The pricing of Medigap policies

During the first six months that you are enrolled in Part A and Part B, you have a guaranteed
right to get a Medigap policy without answering questions about health or pre-existing
conditions, although your premiums may be adjusted for age and gender. That said, many
individuals get their first Medigap policy later in retirement without any substantial premium
adjustments. But occasionally they will be charged higher premiums or, if they have a serious
chronic illness, denied coverage.

After the initial six-month Medigap guaranteed issue is past, you will likely have to answer
health-related questions before you can upgrade to a more comprehensive plan – from Plan L
to Plan G, for example. The exceptions are the UnitedHealthcare/AARP policies, which allow
current policyholders to upgrade to more comprehensive plans without being medically
underwritten.

If this additional flexibility is something you want, you should verify that it will apply to the
Medigap policy that you get. In Indiana, AARP sells Plan N and Plan L, although its premiums for
Plan N do not appear to be competitive (there may be an error in the CSG Actuarial data base).
Also, AARP does not sell High-Deductible Plan F in Indiana.

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