Page 3 - Cover Letter and Evaluation for Patti Messerschmitt

lower than Plan G’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 G. You can likely get
Plan N for about $1,300 a year or less.

Medigap Pricing and Discounts

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.
Often 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 36%. One 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 will be an increase for health care inflation. Still, these policies can be good deals
if they are attractively priced.

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 or vision coverage.

Coverage for diabetes supplies and drugs

Most diabetic supplies and drugs are covered by either Part B or Part D. The attachment to this
letter lists the various services that diabetics sometimes use and indicates whether they are
covered by Part B or Part D.

These supplies and drugs cost much less when they are covered by Part B than when they are
covered by Part D. If they are covered by Part B, you won’t have any co-payments after you’ve
paid the annual $198 Part B deductible (Medicare will pay 80% of the cost and your Medigap
policy will pay the 20% balance). But if they are covered by Part D, you will have co-payments.

Some but not all insulin pumps are covered by Medicare. If a pump is covered, so is the insulin
it uses. When Medicare covers an insulin pump, it will be covered by Part B in a category known
as Durable Medical Equipment (DME). Wheelchairs, walkers, and other long-lasting devices are
covered by Part B in the DME category.

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