Page 3 - Cover Letter and Medicare evaluation for Mr. Rod Fallow

sold to people who turn 65 in 2020 or later, and so the number of Plan F policyholders is slowly
declining, which some expect will lead to higher premium increases. As mentioned, though, you
can get Plan F for about $250 more each year than you’ll pay for Plan G. Some people like Plan F
for the convenience of never having to make a co-payment for a Medicare-covered service.

Here are brief summaries of the two plans compared in your evaluation:

1) Medigap Plan G. This plan covers all of Medicare’s gaps except for the annual Part B
deductible, which is $203 this year. That means that once you’ve paid the Part B
deductible, you will not have any further cost-sharing for Medicare-covered services. In
Santa Clara County you can likely purchase a Plan G policy for about $1,700 a year (or
roughly $140 a month) or perhaps less. Appendices A1 and A2 show insurance
companies’ Plan G premiums – those in Appendix A1 are from the California Dept. of
Insurance and include the companies’ phone numbers; those in Appendix A2 are from
CSG Actuarial.

2) Medigap Plan N. While this plan is slightly less comprehensive than Plan G, it still
provides excellent coverage. The only differences between this plan and Plan G are that
you will have co-payments of up to $20 for doctors’ office visits and $50 if you go to the
emergency room. You should be able to get Plan G for about $120 a month (or roughly
$1,450 annually). Appendices A1 and A3 show the insurers’ Plan N premiums.

The pricing of Medigap policies and California’s Birthday Rule

When getting 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. One guideline is that larger companies tend to have slightly lower
annual premium increases, according to a government study a few years ago.

CSG Actuarial’s premium comparisons in Appendix A2 and Appendix A3 may be helpful in a
couple of ways. First, they can serve as a starting point to identify the companies that have
lower premiums; second, they show the companies’ financial ratings by A.M Best and (in a few
cases) Standard & Poor. And for many insurers, they show recent years’ premium increases.

CSG Actuarial is a quoting service for insurance agents, and in some cases the premiums shown
in the appendices may not include commissions (I don’t know which ones they are). But for
most companies, the premiums should accurately reflect what you will pay today. Still, it’s
important to call the insurers to get current quotes. The premiums shown in Appendix B1 are
from the California Dept. of Insurance, and in a few instances these premiums appear to be out
of date.

California has a Medigap consumer protection law that’s known as the “Birthday Rule.” This
law, described in Appendix B4, allows Medigap policyholders to switch insurance companies

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