Page 4 - Cover Letter and Evaluation for Margaret Rockey

a year’s premiums in advance. Larger discounts are typically available when both spouses buy
their policies from the same company. Some Medigap insurers offer extra non-medical benefits
like health club memberships and in a few cases, limited dental/vision coverage.

In Arizona, the Medigap policies sold by AARP have early enrollment discounts – in your case
the discount is 39% and will remain at that level until you are 68, after which it will be reduced
by 3% a year until you are age 80. These polices can be good deals if they are attractively
priced, but you should be aware that once you turn 68 you will get two premium increases each
year – the 3% annual increase as the early enrollment discount gradually vanishes plus another
increase for health inflation. AARP’s pricing methodology is explained in a separate attachment
to this letter.

Telephone numbers of the insurance companies licensed to sell Medigap policies in Arizona are
shown in Appendix B3.

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 17 Advantage plans in Yavapai County, and for the evaluation, I selected two plans
sponsored by AARP – one an Advantage PPO plan and the other an Advantage HMO plan. These
are the only two plans that have all your providers listed in their networks and that are also
among the lower-priced plans for your prescription drugs. Both plans have above-average
quality ratings from Medicare.

As noted above, it’s important that prior to enrolling in an Advantage plan, you verify with your
physicians’ offices that they are still in the plan’s network. In the HMO plan, you will pay full
cost for any out-of-network services (except for emergencies). And in the PPO plan, you will
have higher co-payments – as much as 40% of cost – for out-of-network services.

Because you haven’t yet chosen an ophthalmologist, if you decide to enroll in an Advantage
plan, you will want to choose one who is in the plan’s network. If you already have an
ophthalmologist in mind, you can contact his/her office to find out if he/she is in the network.
And if you don’t have one in mind, you can call the plan and ask how many ophthalmologists
are in the plan’s network and their names. Both Advantage plans in your evaluation include
some limited benefits for routine vision care, which Medicare does not cover. But Medicare has
good coverage for diseases of the eye.

In addition, both plans have supplemental dental packages that you can get for an added
monthly premium. But before purchasing a supplemental dental coverage, check with Dr. Stroh
to make sure he accepts it. Following are brief descriptions of each plan, and their benefit
summaries are in the appendices.

1) AARP Medicare Advantage Walgreens PPO Plan. This plan has a zero monthly premium
and a zero deductible for medical coverage. But it has a fairly high $40 monthly drug

4