Page 6 - Cover Letter and Evaluation for Susan Marx

supply of medications remaining at the end of the year (and you may not order all your drugs
on May 1).

On the other hand, if Humira’s prices increase during the year, your co-payments will increase
because regardless of the plan you enroll in, you will pay a percentage the price. But for the
other two drugs you take, the co-payment amounts are fixed and should not change this year.

As you will see on pages 3-4 of the evaluation, the costs for your drugs are all in the same
range. If you get a Medigap policy, the lowest-cost stand-alone drug plan is the Humana
Walmart Value Rx Plan (Appendix D1). In this plan your estimated costs for the last eight
months of this year are $4,538, assuming you get mail-order refills. That amount includes the
plan’s premiums and the co-payments for your drugs. This plan’s only preferred pharmacy in
your area is Walmart Pharmacy. This plan’s benefit summary is in Appendix D2. To enroll in this
plan, you can call (800) 706-0852.

In the Aetna Medicare Value PPO Plan, your estimated Rx drug costs are $4,483. In this plan
CVS is a preferred pharmacy but Rite Aid is not.

And in the UPMC for Life HMO Premier Rx Plan, your estimated Rx drug costs are $4,401. Rite
Aid is a preferred pharmacy in this plan, as indicated in Appendix C4.

If you choose to enroll in either of the Advantage plans, you can call the plan’s toll-free number
shown on pages 2-3 of the evaluation. When you enroll in an Advantage plan, you will also get
its Rx drug coverage.

Summary

In general, comprehensive Medigap plans such as Plan G and Plan L have high premiums and
low out-of-pocket risks. The opposite is true for Advantage plans, most of which have low
premiums but high risk. As an example, the Advantage HMO plan in your evaluation has zero
premiums for health coverage but a $6,000 out-of-pocket limit, which is this plan’s worst case
for Medicare-covered costs. In contrast, Plan G has annual premiums of $1,500 or less but after
the Part B deductible has been paid, it has no additional out-of-pocket risk for Medicare-
covered services.

One way to think of the premium/risk tradeoff is that you pay higher premiums to reduce your
out-of-pocket risk. The same principle applies to property and casualty insurance -- you may
decide to pay a higher premium to get a lower deductible. With Medicare supplemental
coverage, younger and healthier retirees may be willing to accept the added risk of Advantage
plans, while those with health issues may be less inclined to do so.

In most cases you will only be able to change your coverage during Medicare’s annual open
enrollment period (October 15 – December 7), with the change going into effect on January 1.
During this annual open enrollment period, you can switch from one Advantage plan to another

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