Page 4 - Cover Letter and Evaluation for Paul Stelter

1) Medigap Plan F. This is the most comprehensive Medigap plan, covering all of
Medicare’s gaps, and it’s available only to people who turned 65 prior to this year. With
this, the entire cost of your Medicare-covered medical services will be your premiums
(Part B + Medigap premiums). Even though this is more coverage than most people
need, some choose it for the convenience of never having a co-payment or a deductible
for a Medicare-covered service.

Plan F and Plan G are identical except that Plan G does not cover the Part B deductible,
which this year is $198. This year Plan F’s premiums are usually $200-$225 higher than
those of Plan G, although this can vary quite a bit from one company to the next (as you
can see in the appendices). For Plan F, you should be able to get a policy for about
$2,100 a year or slightly less.

2) Medigap Plan N. This plan is less comprehensive but still provides solid coverage. Its
gaps include the $198 Part B deductible, co-pays of up to $20 for doctor’s office visits,
and a $50 co-pay for emergency room visits. Annual premiums are roughly 25% lower
than Plan F’s, and if you do not go to the doctor frequently you would probably save
money in this plan compared to what you would pay in Plan F or Plan G Annual
premiums for Plan N are in the $1,400 - $1,500 range for the lower premium insurers.

Medigap Pricing and Discounts

Your Medigap premiums will likely be $200-$250 a year more than your wife’s for the same
plans. One reason is that in Illinois most companies adjust their premiums for age – the rule of
thumb is that for each additional year of age, premiums are about 3% higher. And some
companies charge higher premiums to men than they do to women of the same age.

Companies that sell Medigap policies often offer discounts. As an example, some companies
offer small discounts for automatic debit payments or for paying a year’s premiums in advance.
The largest discounts are the “household discounts” offered by some insurers when both
spouses sign up for Medigap policies. These discounts usually range between 3% and 10%. The
premiums from CSG Actuarial in Appendices B2 and B3 show the percentage amounts of these
discounts for the companies that offer them, and the premiums that are listed include these
discounts. Some Medigap insurers include benefits like a Silver Sneakers membership or limited
dental coverage.

Another thing to keep in mind is that in Illinois, the UnitedHealthcare/AARP policies offer an
early enrollment discount that equals 3% a year for each year someone is younger than 77. In
your case, this discount would be 21%. One thing to be aware of with the early enrollment
discount is that you will likely have two premium increases each year – the first a 3% increase
as the discount gradually vanishes and the other an increase for health care inflation.

4