Page 4 - Cover Letter and Evaluation for Melanie

The Medigap premiums shown in Appendices B1 though B4 are from CSG Actuarial, a service
used primarily by insurance agents. Some premiums in the CSG lists may be lower than you can
get because the commissions are not included (unfortunately, there’s no way for me to know
which ones they are). Most of the premiums, though, should be current.

CSG Actuarial’s premiums can be helpful in a couple of ways. First, they can serve as a starting
point to identify the companies that have lower premiums; second, these quotes also show the
insurance companies’ financial ratings by A.M Best and (for the larger companies) Standard &
Poor. CSG Actuarial’s premiums do not include the companies’ phone numbers, which can be
found in Appendix B5.

There’s one other thing you may want to keep in mind for future reference. California has a law
that permits people who already have Medigap policies to switch to another insurer each year
during the 30-day period following their birthdays without having to answer questions about
their health status. This law is sometimes called the “Birthday Rule,” and an explanation of it is
attached to this letter. If you move back to California, you might be able to use this rule in the
future to switch your policy to a company that has lower premiums – but you can do that only
during the 30-day period following your birthday each year.

Discounts

Insurance companies that sell Medigap policies offer discounts of various kinds. As an example,
some companies have discounts for automatic debit payments of monthly premiums or for
paying for a year’s premiums in advance.

In addition, the UnitedHealthcare/AARP Medigap policies have an early enrollment discount
that in your case is 21% below AARP’s standard rate. The discount is calculated by multiplying
3% by the number of years that you are younger than 75. Your discount equals 7 years x 3%, or
21%, and that discount will be reduced by 3% each year until you turn 75.

If you acquire an AARP policy, then, you may have two increases a year – one a 3% increase
associated with the reduced discount (until you turn 75) and the other an increase for health
care inflation. AARP policies can be good choices if they are attractively priced, but you should
be aware that your premiums may rise more quickly than with many other insurers. After you
turn 75, the AARP premiums may increase more slowly.

Some insurers also provide extra benefits such as membership in Silver Sneakers, which give
you access to more than 12,000 gyms and health clubs nationally.

Rx Drug Plan Coverage

People who have Medigap policies are also required to have Part D stand-alone plans. The
drugs, dosages, and monthly quantities that were used to find the lowest-cost plans are shown