Page 3 - Cover Letter and Evaluation for Dr. Maury Rosenstein

The pricing of Medigap policies

If you plan to keep your Medigap policy for a year or more, it’s good to give some thought as to
the company that you will buy your policy from and to make a few calls to get current quotes.
While it’s important to choose a company that has relatively low premiums, you may also wish
to factor in a company’s financial strength and size. As a rule, larger companies have slightly
lower annual premium increases, according to a government study a few years ago.

The premium comparisons in Appendix B1 are from the West Virginia Offices of the Insurance
Commission and include the insurance companies’ toll-free telephone numbers. These
premiums should be current because they were revised on December 3, although there may be
minor pricing variations by gender and zip code.

Appendices B2 and B3 list the premiums for Plan F and Plan G, respectively. These premiums
are from CSG Actuarial, a firm that provides quotes for insurance agents. Some of the premiums
here may be lower than you can get because the commissions are not included (there’s no way
for me to know which these are).

The CSG Actuarial premiums may be helpful in a couple of ways. The premiums are sorted from
lowest to highest, which makes it easier to identify the lowest-premium companies. Also, the
CSG Actuarial comparisons give you the insurers’ financial ratings. But the CSG Actuarial listings
do not include the companies’ toll-free numbers, which you can find in Appendix B1.

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 a year’s premiums in advance. The largest discounts are typically available when both
spouses buy their policies from the same company. The CSG Actuarial premium comparisons in
Appendices B2 and B3 show the percentage amounts of the household discount (but the
premiums shown do not include the discount).

While not all companies offer these household discounts, the ones that do often have
substantially reduced premiums. You and your wife might be able to take advantage of these
discounts. If, for instance, you buy your Medigap policy from the same insurer that underwrites
her policy, both your premiums might be reduced.

In addition, 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 -- your 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

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