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deductible will not apply to the out-of-pocket limit. Annual premiums for Plan L are
about $1,450 or perhaps less.

The pricing of Medigap policies

If you decide to get a Medigap policy, 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 go with a company that has relatively low premiums, you may also want 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.

Unlike most other states, California has a law that protects Medigap policyholders from having
to remain with an insurance company that has sharply raised its premiums. This law, explained
in Appendix B2, gives people a guaranteed right to switch to another insurance company during
the 30-day period following their birthdays each year without medical underwriting. If in the
future you find another insurance company that has lower premiums, you can switch to that
company during the 30-day period following your birthday each year.

The premium comparisons in Appendix B1 are from the California Department of Insurance and
include insurance companies’ toll-free telephone numbers. It’s possible that some of these
premiums are a few months out of date, in which case the quotes you receive could be slightly
higher.

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 for a year’s premiums in advance. The largest discounts are typically available when
both spouses buy their policies from the same company. While not all companies offer these
“household discounts,” the ones that do often have substantially reduced premiums.

In addition, the 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. Thus 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 health care inflation.
AARP policies can be good choices if they are attractively priced, but you should be aware that
your premiums may rise more quickly than with many other insurers. After you turn 75, the
AARP premiums will likely increase more slowly.

In addition to discounts, some insurers provide extra benefits such as membership in Silver
Sneakers, which give you access to more than 12,000 gyms and health clubs nationally.

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