Page 4 - Cover Letter and Evaluation for Stephen Spero

The largest discounts are the “household discounts” offered by some insurers when both
spouses sign up for Medigap policies. These discounts usually range between 3% and 10%. The
premiums from CSG Actuarial in Appendices B2 and B3 show the percentage amounts of these
discounts for the companies that offer them, and the premiums that are listed include these
discounts. Besides the discounts, some Medigap insurers include incidental benefits like a Silver
Sneakers membership or some limited dental coverage.

Another thing to keep in mind is that in California the UnitedHealthcare/AARP policies offer an
early enrollment discount that equals 3% a year for each year someone is younger than 77. In
your case, this discount would be 30%. The only thing to be aware of with the early enrollment
discount is that you will likely have two premium increases each year – one will be a 3%
increase as the discount gradually vanishes and the other an increase for health care inflation.

With an AARP policy, then, your premiums may go up more quickly until you turn 77. After that,
they may increase more slowly than those of many other insurers because the AARP premiums
are based on a modified community rating that tends to favor older retirees.

If you decide to get a Medigap policy + stand-alone drug plan, another thing to be aware of is
California’s Birthday Rule, which is summarized in an attachment to this letter. During the 30-
day period following their birthdays each year, California residents who have Medigap policies
may switch their plans to a different insurer with lower premiums without answering questions
about their health. The Birthday Rule cannot be used to upgrade from a less comprehensive to
a more comprehensive Medigap plan (such as from Plan N to Plan G), but it can be used to keep
the same plan while switching to a different insurance company that has lower premiums.

The two Medicare Advantage plans in your evaluation

Medicare Advantage plans are managed-care plans – HMO’s and PPO’s, for the most part.
There are 40 Advantage plans in San Diego County, and 29 of these plans have earned Medicare
quality ratings of four stars or higher. These four-star-or-higher plans receive bonuses from
Medicare for their quality of care, and they typically have high levels of customer satisfaction.

In Appendix C1, these higher-rated plans are ranked by their costs for the Rx drugs that you
take (only the nine lowest-cost plans are shown). As mentioned in an earlier e-mail, the only
four-star or higher Advantage plans that cover the metformin 1,000mg OSM extended release
tablets are the four plans sponsored by Anthem Blue Cross.

Only two of the Anthem Blue Cross Advantage plans have your physicians listed in their
networks, as shown in Appendix A2, and these plans are the two compared in your evaluation.
You have already verified that Dr. Taunton is in these two plans’ networks, and it would be a
good idea before enrolling in either of these plans to verify that your other two doctors are also
in the plan’s network – since the provider directories that we rely are sometimes not current.

4