Page 5 - Cover letter & Medicare evaluation for Mr. Carl Zambon

Attained-age: Premiums are about three percent higher for each additional year
of age. That means that the premiums for a 75-year-old are about 30% higher than those of a
65-year-old. Most Medigap insurers in Maryland use this ratings approach.

Issue-age: Premiums are initially set higher to account for future age
adjustments, and so annual premium increases should be lower than in attained-age policies.

Community rating: In a pure community ratings approach, everyone pays the
same premiums regardless of age or health. In Maryland, the UnitedHealthcare/AARP Medigap
policies use a modified community rating, discussed below.

None of these three approaches is inherently better than another. There is a great deal of
inconsistency in companies’ premiums, regardless of the approaches they use. We suggest that
you not place too much emphasis on the ratings methods because several other factors can
affect the premiums.

As you look for ways to keep your costs low, it’s good to keep in mind that the insurance
companies that sell Medigap policies often offer discounts. Some companies, for instance, offer
small discounts for automatic debit payments or for paying a year’s premiums in advance.
Among the largest discounts are the “household discounts” offered by some insurers when
both spouses sign up for Medigap policies – discounts that range between 3% and 10%.

The UnitedHealthcare/AARP policies offer an early enrollment discount that equals 3% a year
for each year someone is younger than 77. In your case, this discount would be 18%. With the
early enrollment discount, you may have two premium increases each year – one a 3% increase
as the discount gradually vanishes and the other an increase for health care inflation.

With an AARP policy, then, your premiums may go up more quickly until you turn 77. After that,
they may increase more slowly than those of many other insurers because the AARP premiums
are based on a modified community rating that tends to favor older retirees. These policies can
be good deals if they are attractively priced, but you should be aware that you’ll likely have two
premium increases a year until you turn 77.

Some Medigap insurers include benefits like a Silver Sneakers membership or limited dental
coverage.

Rx Drug Plan Coverage

The names, dosages, and monthly quantities of the drugs that were used to find the lowest-cost
plans are shown on the first two pages of Appendix D1. This list of your drugs does not include
Cerefolin NAC because it is not covered by Part D. Also, the generic equivalent of Wellbutrin –
bupropion hydrochloride – is listed instead of Wellbutrin.

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