Page 5 - Cover Letter and Mediicae Evaluation for Mr. Bruno V. Manno
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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 Medigap
               policies use a modified community rating, as 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 many other factors can
               affect the premiums.

               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 premiums from CSG Actuarial in Appendices B1, B2 and B3 show the percentage amounts
               of these discounts for the companies that offer them. CSG Actuarial’s premiums include these
               household discounts.

               Another thing to keep in mind is that in Maryland, 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 12%. 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.

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

               Rx Drug Plan Coverage

               You will need to enroll in a stand-alone drug plan to get your Part D coverage. Your estimated
               annual drug costs for next year are low because all your drugs are generics. The names,
               dosages, and monthly quantities of the drugs that were used to find the lowest-cost plans are
               shown on the first pages of Appendix D1. The drug tadalafil is not included because it is not
               covered by Part D. Appendix D1 also lists the lowest-cost stand-alone drug plans.

               Three of the topical application drugs – hydrocortisone cream, ketoconazole cream, and
               alclometasone dipropionate – are available in several formulations (creams, ointments) and

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