Page 2 - Cover Letter and Evaluation for Kirk Schmidt

Perhaps the most desirable attribute of Medigap policies is the flexibility they offer. There are
no networks, and you will be covered when you see any provider who accepts Medicare (as
some 99% of doctors and public hospitals do). That means you will have the ability to go to
virtually any doctor or hospital or clinic in the U. S. and be covered.

Medigap policies do not include prescription drug benefits, and so you will also need to enroll in
a Part D stand-alone drug plan, as discussed in the Rx drug coverage section below. Also,
Medigap policies do not cover routine dental and vision care or hearing aids. Plans F, G, and N
include some benefits for medical emergencies while traveling outside the United States (as
shown on pages 6-7).

Here are summaries of the four Medigap options compared in your evaluation. They are listed
in the order of their comprehensiveness.

1) Medigap Plan F. The most comprehensive Medigap plan, it covers all of Medicare’s
gaps. If you get Plan F, then, you will have no cost-sharing for Medicare-covered
services. In Monterey County, you can likely purchase a Plan F policy for $1,800 a year
or less. Beginning in 2020, Plan F will no longer be sold, although policyholders who
already have this plan at that time may keep it.

2) Medigap Plan G. This plan’s benefits are identical to those of Plan F except that it does
not cover the Part B deductible, which in 2017 is $183. In some cases, people can save
money by choosing Plan G instead of Plan F because the premium savings are greater
than the amount of the Part B deductible.

As an example, the UnitedHealthcare/AARP annual premiums for Plan G (shown in
Appendix B3) are roughly $237 less than its annual premiums for Plan F (shown in
Appendix B2). Since the only difference between these two plans is that Plan G doesn’t
cover the $183 Part B deductible, in 2017 you would have saved just over $50 in Plan G.
Next year’s Part B deductible will be greater than $183, but It’s unlikely that it will be
more than $200.

The downside of Plan G is that not many companies sell it, and so there’s less
competition (which generally translates to higher premiums). In the evaluation, I’ve
estimated that Plan G’s premiums are $1,600 a year, or $200 less than Plan F’s
premiums.

3) Medigap Plan N. This is a slightly less comprehensive plan than Plans F and G and it has
some small gaps (pages 6-7 show where these gaps are). People in relatively good
health who don’t go to the doctor frequently will likely save $200-$300 a year in this
plan compared to choosing the higher-premium Plan F. Estimated annual premiums are
$1,300 a year.

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