Page 4 - Cover Letter and Medicare Evaluation for Donald Pender

that offer these “household discounts” are indicated in Appendices B2 and B3, as well as the
discount percentages (the premiums that are shown do not include these discounts). If you and
your wife both decide to get Medigap policies, you might see if you can save money by
choosing an insurance company that offers household discounts.

Another type of discount is the early enrollment discount offered by the UnitedHealthcare
Medigap policies endorsed by AARP. The discount is 3% a year for each year that the
policyholder is younger than age 77, and so in your case the discount is 33 % (3% a year times
11 years – since you will be 66 when your policy goes into effect). These policies can be good
deals when they are attractively priced, but if you get a UHC/AARP Medigap policy you will
probably have two increases a year – the first a 3% increase because you are a year older, and
the second an increase for health care inflation.

Birthday Rule

For future reference, California has a Medigap consumer protection law that’s known as the
“Birthday Rule.” This law, described in Appendix B4, allows Medigap policyholders to switch
insurance companies each year during the 60-day period following their birthdays without
having to answer questions about their health or disclosing pre-existing conditions.

People can use this little-known rule to avoid getting stuck with an insurance company that has
sharply raised its premiums. They can switch their policy to a different insurer that has lower
premiums. But they cannot use the Birthday Rule to upgrade from a less comprehensive to a
more comprehensive Medigap plan, e.g., from Plan N to Plan G.

Medicare Advantage plans

Your evaluation also compares two Advantage HMO plans. Next year there will 70 Advantage
plans in Orange County, which is more than twice the national average of plans per county. The
competition among these plans as well as the county’s large number of potential enrollees
means that these plans have the best benefits of any Advantage plans in the country.

To find the plans that will best meet your needs, I sorted the plans by their estimated annual
costs for the one Rx drug that you take and then I eliminated plans that have Medicare quality
ratings lower than four stars (even so, that left 37 plans with four-star or better ratings). The
plans that ranked highest based on these two screens are listed in Appendix C1.

Ideally, it would be good also to have an Advantage PPO plan to compare, but there are only
four of these plans in Orange County and two of them are too new to have a quality rating. The
other two have high costs – one has a $90 monthly premium, a $750 health plan deductible,
and you would pay more than $1,100 for the one Rx drug you take. And the other has a steep
$172 monthly premium.

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