Page 4 - Cover Letter and Medicare Evaluation for Rod Morgan

insurance companies’ financial ratings by A.M Best and (in a few cases) Standard & Poor. And
for most of the companies, they also show recent years’ premium increases.

CSG Actuarial is a quoting service for insurance agents, and in a few cases the premiums shown
in the appendices may not include the commissions (I don’t know which ones they are). But for
most companies, the premiums should accurately reflect what you will pay today. Still, it’s
important to call the insurers to get current quotes.

In addition, in Appendix B1 are the phone numbers of the carriers licensed by the Colorado
Dept. of Regulatory Affairs to sell Medigap policies. Companies’ premiums are also shown here,
although they are six months out of date and some of them may have increased since this
document was published.

Premium Discounts

Insurance companies that sell Medigap policies sometimes offer discounts of various kinds.
Some companies, for instance, have discounts for automatic debit payments of monthly
premiums or for paying for a year’s premiums in advance. The largest discounts are typically
when both spouses buy their policies from the same company. While not all companies offer
“household discounts,” the ones that do often have substantially reduced premiums.

In addition, the UnitedHealthcare/AARP Medigap policies sold in Colorado have an early
enrollment discount that in your case is 36% below AARP’s standard rate. The discount is
calculated by multiplying 3% by the number of years that you are younger than 77. In your case,
the discount equals 12 years x 3%, or 36%, and that discount will be reduced by 3% each year
until you turn 77.

If you acquire an AARP policy, then, you may have two premium increases a year – one a 3%
increase associated with the reduced discount (until you turn 77) 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 gradually vanishing discount each year until you turn 77,
your premiums may rise more quickly than with many other insurers. After you turn 77, the
AARP premiums may increase more slowly.

In addition to discounts, some Medigap insurers include health club memberships in their
benefit packages.

Medicare Advantage plans

Your evaluation includes two Advantage PPO plans. In Jefferson County there are 13 Advantage
PPO plans, and I selected the two that have the lowest costs for your Rx drugs and that have a
minimum quality rating of four stars. Medicare’s quality ratings are an important criterion to
consider when choosing an Advantage plan. Among other things, they measure a plan’s medical
quality, its attention to preventive tests and screenings, and customer satisfaction. Plans have a

4