Page 4 - Cover Letter and Evaluation for Richard Hain

paying a year’s premiums in advance. The largest discounts are typically available when both
spouses buy their policies from the same company. While not all companies offer these
“household discounts,” the ones that do often have substantially reduced premiums.

In addition, the UnitedHealthcare/AARP Medigap policies have an early enrollment discount
that in your case is 30% below AARP’s standard rate. The discount is calculated by multiplying
3% by the number of years that you are younger than 75. In your case, the discount equals 10
years x 3%, or 30%, and that discount will be reduced by 3% each year until you turn 75.

If you acquire an AARP policy, that means 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 because of the reduced discount each year until you are 75, your
premiums may rise more quickly than with many other insurers. After you turn 75, the AARP
premiums will likely increase more slowly.

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

Medicare Advantage plans

As you may know, Advantage plans are managed-care plans – primarily HMO’s and PPO’s.
Before enrolling in an Advantage plan, you should verify with your doctors’ offices that they are
still in the plan’s network.

Here are summaries of the two Advantage plans compared in your evaluation.

1) AARP Medicare Complete Secure Horizons Plan 2 (an HMO). This plan has several good
features including an above-average 4-star quality rating from Medicare, a fairly large
provider network for an HMO, zero premiums for health and Rx drug coverage, and no
health plan deductible. Also, there are no co-payments for your simvastatin prescription
if you get mail-order refills, which means that in this plan your only fixed costs are your
Part B premiums.

HMO’s are generally considered the most cost-effective type of managed care plan, and
people in good health can save substantial amounts in them. Their potential downside is
that they are restrictive – in most HMO’s people must get referrals from their primary
care doctors to see specialists, and prior approvals are often required for some
procedures. Also, unless it’s an emergency there is no coverage when you see an out-of-
network provider.

2) Humana Choice PPO Plan. I wanted to include a PPO plan in your evaluation, and this is
the only Advantage PPO plan in your area, as shown in Appendix D1. This plan’s strong
points are a large network of more than 20,000 providers and a 4-star quality rating

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