Page 3 - Cover Letter & Evaluation for David Steenburgen

will be the most comprehensive Medigap plan. Your annual premiums in this plan will
likely be $2,250 or less.

3) Medigap Plan N. This is slightly less comprehensive than Plans F and G, and it has some
small gaps. In this plan, people in relatively good health who don’t go to their doctors
frequently will likely save $200-$300 a year vs. the higher-premium Plan F. But you will
have co-payments from time to time. Estimated annual premiums are $1,850 or less.

4) Medicare Plan L. This is the least comprehensive of the Medigap plans in your
evaluation. One nice feature is its low $2,620 out-of-pocket limit – it is the only Medigap
plan in your evaluation that has an OOP limit. But the limit does not include premiums
and applies only to the services the plan covers. As an example, the Part B deductible
($183 in 2018) is not covered by this plan and so any money you spend toward the
deductible will not apply to the out-of-pocket limit. Annual premiums for Plan L are
about $1,675, although in Arizona few insurers sell this plan.

The pricing of Medigap policies

Most people who buy Medigap policies will keep those policies with the same insurance
companies. In some cases, it may be difficult for them to later change companies or plans if
they have serious pre-existing conditions. It’s prudent, then, to give some thought as to the
company that you buy your policy from. 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.

Premiums for the four Medigap plans in your evaluation are shown in Appendices B1 through
B4. These premiums are from CSG Actuarial, a firm that provides quotes for insurance agents.
Some of the premiums listed may be lower than you can get because commissions are not
included (unfortunately, there’s no way to filter these out or for me to know which ones they
are). Most of the premiums, though, should be accurate.

CSG Actuarial’s premiums can be helpful in a couple of ways. First, the premiums are listed from
lowest to highest, and so they can serve as a starting point to identify companies that have
lower premiums. Then you can call three or more of those companies for current quotes.
Second, CSG Actuarial also shows the insurance companies’ financial ratings by A.M Best and (in
the case of larger insurers) Standard & Poor.

Discounts

Most insurance companies that sell Medigap policies offer discounts of one kind or another. As
an example, some companies offer discounts for automatic debit payments of monthly
premiums. And most companies offer household discounts when both spouses buy a policy. In

3