Page 4 - Cover Letter and Evaluation for Sarah Spero

Typically, the largest discounts are available to spouses who buy their Medigap policies from
the same insurance company. These household 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.

Also, in California 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 30%. The only thing to be aware of with the early enrollment discount is that you will likely
have two premium increases a year – one will be a 3% increase as the discount gradually
vanishes and the other an increase for health care inflation.

With an AARP policy, then, your premiums may go up more quickly until you turn 77. After that,
they may increase more slowly than those of many other insurers because the AARP premiums
are based on a modified community rating that tends to favor older retirees.

Besides the discounts, some Medigap insurers include incidental benefits like a Silver Sneakers
membership or some limited dental coverage.

If you decide to get a Medigap policy + stand-alone drug plan, one other thing to be aware of is
California’s Birthday Rule, which is summarized in an attachment to this letter. During the 30-
day period following their birthdays each year, California residents who have Medigap policies
may switch their plans to a different insurer with lower premiums without answering questions
about their health. The Birthday Rule cannot be used to upgrade from a less comprehensive to
a more comprehensive Medigap plan (such as from Plan N to Plan G), but it can be used to keep
the same plan while switching to an insurer that has lower premiums.

The two Medicare Advantage plans in your evaluation

Medicare Advantage plans are managed-care plans – HMO’s and PPO’s, for the most part.
There are 40 Advantage plans in San Diego County, and 29 of these plans have earned Medicare
quality ratings of four stars or higher. These four-star-or-higher plans receive bonuses from
Medicare for their quality of care, and they often have high levels of customer satisfaction.

In Appendix C1, these higher-rated plans are ranked by their costs for the Rx drugs that you
take. All but one of the 29 plans are HMO’s, and the only Advantage PPO plan that’s listed has
high premiums and a $500 health deductible.

The two Advantage plans in your evaluation have low costs for your drugs and have your
physicians listed in their provider networks, as indicated in Appendix A. But before enrolling in
an Advantage plan, it’s important to verify with your medical providers that they are still in the
plan’s network. Sometimes the online directories are out of date, and if you enroll in an HMO
plan that does not have one of your physicians in its network, you will not be covered when you
see him.

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