Page 3 - Evaluation for Jeanne Huybrechts

As you will see in Attachments B1 and B2, there is a wide variety of premiums among
companies as well as among plans. A large government study a few years ago indicated that
larger insurance companies tend to have slightly smaller annual premium increases, and so you
may wish to take that into account.

If you choose a less comprehensive Medigap plan such as Plan L, the UnitedHealthcare policies
endorsed by AARP allow you later to upgrade to a more comprehensive plan without answering
health questions. If that is something you want to consider, you should verify with UHC that
you’ll later be able to switch to one of the more comprehensive plans (from Plan L to Plan F)
without answering questions about your health.

Also, the UHC plans use a modifed community rating to set premiums. Ordinarily this would
result in high premiums for younger retirees, but UHC offers a discount of 3% a year for each
year that you’re younger than age 75 (this discount is offered to people 68 and younger).
Because you will just have turned 67 when your policy will go into effect, you should receive a
24% discount from the standard rate. But you should be aware that as the discount is reduced
by 3% each year, you’ll likely have two premium increases – a 3% increase attributable to the
reduced discount and then another 3% or so for health care inflation.

Something else you may want to be aware of is that California has a law that Medigap
policyholders can switch to a different insurance company during the 30-day period following
their birthdays each year. During this period, insurers cannot ask health-related questions.
An explanation of the birthday rule (as it is called) is attached. You cannot, though, use this rule
to upgrade to a more comprehensive plan – you can use it only to move laterally, e.g., from
Plan F sold by one insurer to Plan F sold by a different insurer, or to a less comprehensive plan.

Medicare Advantage plan

The other option shown in your evaluation is the Aetna Medicare Choice plan, a PPO plan. As I
mentioned when we spoke, this is the only Advantage PPO plan in Los Angeles County. I
considered only one HMO – a Health Net plan, but Dr. Feltman is not listed in its network. Also,
as you are aware, HMO’s are restrictive – most of them require referrals whenever you want to
see a specialist (unlike a Medigap policy in which you do not need a referral).

This Aetna plan’s strong features are that all three of your doctors are listed in its network, it
has an above-average quality rating of 4 stars from Medicare, and it has a large network of
more than 9,000 providers. But it has several negatives – a $750 health plan deductible, an out-
of-pocket (OOP) limit of $6,700 for network services, and 40% of cost if you see a non-network
provider. Moreover, any out-of-network costs count toward a higher $10,000 OOP limit.

Rx Drug Plan Coverage

As mentioned earlier, if you decide to purchase a Medigap policy, you will also need to enroll in
a Part D stand-alone plan. The lowest-cost stand-alone plan for your two drugs is the First

3