Page 3 - Cover letter and evaluation for Linda Hosier

up to 15% more than the Medicare-approved rates. Plans F and G cover this 15% surcharge, but
Plans N and L do not.

As you indicated on your questionnaire, Dr. Kakkis does not accept Medicare. When physicians
opt out of Medicare, they may still be able to order services that Medicare and your Medigap
policy will pay for. Services like lab tests and diagnostic screenings are usually covered by
Medicare, and if in the future Dr. Kakkis asks you to see other providers, you may want to verify
with her whether those services will be covered by Medicare and your supplemental insurance.

The pricing of Medigap policies

It’s good to give some thought as to the company that you will buy your policy from as well as
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 getting
stuck with an insurance company that substantially raises its premiums. This law gives people a
guaranteed right to switch to another insurance company during the 30-day period following
their birthdays each year without going through medical underwriting (although premiums can
take age, gender, and smoking status into account). That means that if at some future point you
find another insurance company that has lower premiums than you are currently paying, you
can switch to that company during the 30-day period without going through medical
underwriting.

This law is sometimes referred to as the “birthday rule,” and it is explained in an attachment to
this letter. People cannot, however, use the birthday rule to upgrade to a more comprehensive
plan – they can only switch laterally or to a less comprehensive plan. As an example, if someone
has Plan F with ABC Insurance Company, he or she can switch to Plan F with XYZ Insurance
Company. But he or she cannot switch from Plan L to Plan F without first having to answer
health-related questions.

Premiums for the four Medigap plans in your evaluation are shown in Appendices B1 through
B6. The premium comparisons in Appendix B1 are from the California Department of Insurance
and they include insurance companies’ toll-free telephone numbers. Appendices B2 through B5
are from CSG Actuarial, a firm that provides quotes to insurance agents.

Some premiums in the CSG Actuarial lists may be lower than you can get since the commissions
may not be included (unfortunately, there’s no way to filter these out or for me to know which
ones they are). Most of these premiums, though, should be close to current quotes. Also,
customized online quotes from AARP are shown in Appendix A6 – these quotes do not include
AARP’s 5% household discount (explained below).

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