Page 3 - Cover Letter and Evaluation for Paul Stelter

Medigap policies do not cover routine vision and dental care or hearing aids, none of which are
covered by Medicare. Neither do they cover prescription drugs, and if you get a Medigap policy
you will also need to enroll in a Medicare prescription drug plan (Part D stand-alone plan).

With the exceptions of seldom sold Plan K and Plan L, Medigap policies do not have out-of-
pocket limits, although that is rarely an issue because Medicare’s underlying catastrophic
protection is strong. Some Medigap plans, including the two compared in your evaluation,
include coverage for foreign travel emergencies.

During the first six months that you have Part B, insurance companies are required to sell you a
Medigap policy without asking health-related questions. But after that six-month guaranteed
issue is past, insurance companies can ask applicants about pre-existing conditions and can
charge higher premiums or deny coverage.

In Illinois, however, there is an exception – as shown in Appendix B1, Blue Cross Blue Shield of
Illinois will sell Medigap policies to people who are past their initial guaranteed-issue period
without asking them health-related questions. This is the only instance that I’m aware of in
which a company sells guaranteed-issue Medigap policies even though it is not required to.

If Blue Cross Blue Shield of Illinois continues this practice in the future, it gives you a potentially
valuable option. As an example, if you initially enroll in an Advantage plan and a few years from
now want to switch to a Medigap policy, then you could get one from BCBS of Illinois.

To get current quotes, you will need to call the insurance companies that sell Medigap policies.
The Illinois Department of Aging’s listings of the companies’ phone numbers and Medigap
premiums are in Appendix B1. This list was revised about two weeks ago, and so the premiums
should in most cases be accurate, but some companies offer may offer discounts that are not
reflected in these premiums.

The Medigap Plan F and Plan N premiums shown in Appendices B2 and B3 are from CSG
Actuarial, a firm that provides quotes for insurance agents. While these premiums should be
current, in some cases they may not include the agents’ commissions (there is no way for me to
know which ones these are). Also, these premiums take into account the household discounts
offered by some Medigap insurers when both spouses buy a policy.

CSG Actuarial’s lists show most companies’ premium increases for the last four years. In some
cases, CSG Actuarial also indicates companies’ financial strength ratings from AM Best Standard
& Poor’s (S&P). The companies’ phone numbers are not included in CSG Actuarial’s premium
listings but they are shown in Appendix B1.

The benefit designs of the ten Medigap plans that are available to you are shown on pages 6-7
of the evaluation. Here are summaries of the two plans compared in your evaluation:

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