Page 3 - Cover Letter and Medicare Evaluation for Neill McLauchlin

It’s important to know that when you first enroll in Part B, you have a six-month period during
which you can get a Medigap policy without answering questions about your health or
disclosing any pre-existing conditions. But after that six-month period has past, you will likely
have to answer questions about your health and may pay higher premiums or be denied
coverage. Some people wait until later retirement to get a Medigap policy, but they take a risk
that they may not be able to get a policy.

Unlike Advantage plans, Medigap policies do not cover routine vision and dental care or hearing
aids (which are not covered by Medicare). It is possible, though, that there are what are known
as “innovative benefit” Medigap plans in North Carolina that include limited dental/vision
benefits. Additional information about Medigap policies is on page 8 of your evaluation.

Medigap premiums

As noted earlier, your estimated Medigap premiums are shown in Appendix B1 and Appendix
B2. The phone numbers of the companies licensed to sell Medigap policies in North Carolina are
in Appendix B3.

In North Carolina, the UnitedHealthcare policies endorsed by AARP use a different method than
other insurers in setting their premiums. Most companies use an “attained-age” approach in
setting their premiums. In this ratings approach, premiums are higher for each additional year
of age. But the AARP policies use a community rating approach, which means everyone pays
the same premium regardless of age (North Carolina refers to these as “No Age” Policies).

To make their premiums competitive for younger retirees like you, AARP offers an early
enrollment discount of 3% a year for each year that someone is younger than age 77. As an
example, for a 66-year-old, the discount is 33% (3% x 11 years). One thing to be aware of with
this approach is that you will likely have two premium increases each year – one of them a 3%
increase because you are a year older and the other an increase for health care inflation. AARP
policies can be good choices if they are attractively priced, but you should be aware that you
may have two premium increases each year until you turn 77.

Comparing the Medigap Plan G and Plan N

The benefit designs of the eight Medigap plans available to you are on pages 6-7 of the
evaluation. Here are summaries of the two Medigap plans compared in your evaluation:

1) Medigap Plan G. This is the most comprehensive Medigap plan available to you. It
covers all of Medicare’s gaps except for the Part B deductible, which this year is $203.
After you’ve paid this annual deductible you won’t have any co-payments for Medicare-
covered medical services during the year. You should be able to get Plan G for about
$1,400 a year (roughly $120 a month) or possibly less.

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