Page 2 - Memo to Randy & Nancy

can continue to own theirs). Some people think that Plans C and F will be more susceptible to
sharp premium increases once those plans are no longer sold.

The next most comprehensive plan is Plan G, which covers all of Medicare’s gaps except for the
Part B deductible ($185 this year). And so after people have paid their Part B deductible, their
monthly premiums are their only costs for Medicare-covered services.

Medigap policies do not cover Rx drugs, and people who get Medigap policies must also enroll
in what’s called a Part D stand-alone plan. The best way to choose a Part D stand-alone plan is
to find the plans that have the lowest costs for the Rx drugs you take (I can do that for you – it
takes only a few minutes).

Neither do Medigap policies cover routine dental/vision care. But Medicare/Medigap do cover
diseases of the eyes (glaucoma, cataracts, etc.).

Medigap policies are nationally standardized, which means that all insurers must offer identical
coverage for a given plan. Therefore every company’s medical coverage for Plan G is the same.
Companies are allowed, though, to offer non-medical benefits like a free Silver Sneakers
membership.

Medigap premiums

Premium comparisons are shown in the appendices. It’s good to call a minimum of three
companies to get current quotes. Some of the quotes in the appendices may be out of date, but
they should be close. Here’s an overview of the three appendices relating to Medigap
premiums and each plan’s benefit design.

Appendix A: These premiums are from the California Dept. of Insurance and include the
insurance companies’ toll-free numbers. California separates its premiums into a) group plans
that require some type of membership (AARP), and b) individual plans.

Appendices B1 and B2: Premium quotes from CSG Actuarial for Plans G and N. Plan N is
a relatively new plan that is not quite as comprehensive as Plan G, but that has roughly 20%
lower premiums. Plan N has the highest enrollment of the four plans that were introduced in
2010, and it has a solid benefit package.

The premium comparisons in these two appendices are sorted from low to high, and
they show each company’s rate increases over the last five years. It’s a good idea to go with a
low-premium company that has good financial ratings (by A. M. Best and in some cases,
Standard & Poor’s) and a recent history of 3% or lower annual increases. Phone numbers are
not included in the CSG lists, and you will need to get those in Appendix A.

Appendix C: Benefit designs and estimated annual premiums of the 10 Medigap plans.