Page 3 - Cover Letter and Evaluation for Patricia Hendrickson

which premiums are not adjusted for age. In community-rated policies like those sold by UHC,
most people pay the same premium. But that results in high premiums for young retirees, and
so to remain competitive UnitedHealthcare offers discounts that equal 3% a year for each year
the policyholder is younger than age 75.

As an example, a 65-year-old who buys a UHC Medigap policy receives a 30% discount. That
discount gradually goes away at the rate of 3% a year until it is gone at age 75. While this
pricing approach makes UHC’s premiums competitive for younger retirees, it results in two
premium increases a year until the policyholder reaches age 75 – a 3% annual increase for the
vanishing discount and an additional increase for health inflation, typically in the 3% range (for
a total annual increase that equals about 6%). After the policyholder reaches age 75, the
premium increases are usually in the 3% range and are not adjusted for age.

Option Two: Horizon Medicare Blue Advantage Plan (an HMO)

This large-network plan is sponsored by Horizon Blue Cross Blue Shield of New Jersey, and it
seems to be the best match for your needs based on the physicians you see and the costs for
the one Rx drug that you take. In Somerset County there are only 12 Medicare Advantage plans
(nationwide, in 2018 the average Medicare beneficiary has 21 Advantage plans to choose
among). Attached to this letter is a list of the 12 Advantage plans available in your area.

As shown in Appendix A2, all your physicians except for Dr. Liu are listed in this plan’s network.
But prior to enrolling in an Advantage plan, you should verify with your doctors that they are
still in the plan’s network because the online directories are sometimes out of date. Also, if you
see Dr. Liu for routine eye care, that’s a service not covered by Medicare (and so it’s less
important that he be in the network). Medicare covers diseases of the eye – cataracts,
glaucoma, macular degeneration, etc. – but not routine eye care.

HMO’s, as you know, are restrictive, and you usually will need referrals from your primary care
doctor before you can see a specialist. Unless it’s an emergency, you will pay the full cost for
services you receive out of network.

As the tradeoff for accepting these restrictions, people can often save substantial amounts in
Advantage HMO plans. This plan, for example, has zero premiums and its annual cost for the Rx
drug that you take is only $56.

Option Three: CIGNA Medicare Supplemental Plan

This is your employer’s retiree plan. It has superior coverage in almost every way, including
exceedingly low premiums for the benefits it provides, and very low out-of-pocket limits for
medical as well as Rx drug coverage. The plan benefit summary is shown in Appendix D1.

Like the Medigap policy, this plan gives you the flexibility to go to any provider who accepts
Medicare. Unlike the Medigap policy, it is an indemnity plan in which you will pay a share of

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