The 10 Standardized Medigap Plans

Because Medicare does not pay for all health care services, you have the option of buying supplemental coverage � known as Medigap because the extra plans cover the gaps in Medicare. Medigap policies are sold by private health insurance companies. 

In 1992, Congress mandated that Medigap policies be standardized into 10 plans, lettered A through J, in order to make it easier for consumers to shop for coverage and avoid scams. (Insurers in Massachusetts, Minnesota, and Wisconsin are permitted to sell somewhat different combinations of benefits.) All companies that sell Medigap plans must sell at least Plan A, which offers the "basic benefits." But not all companies offer the full range of Medigap plans, and some plans might not be available at all in your state.

Two of the plans, F and J, have the option of a high deductible. And under federal law, states can allow insurance companies to add "innovative benefits" to any of the 10 plans. Discounts for such items as eyeglasses or prescription drugs from mail-order pharmacies are also allowed. In addition, any of the plans can be sold as a "Medicare SELECT" policy. Those policies generally cost less because you must use specified hospitals and doctors (except in emergencies).

Plans H and I offer the basic prescription-drug benefit. After you pay your $250 per year deductible, the plan pays 50 percent of the costs of your prescription drugs up to a maximum of $1,250 per year. Plan J offers the extended prescription-drug benefit. After you pay your $250 per year deductible, the plan pays 50 percent of the costs of your prescription drugs up to a maximum of $3,000 per year.

There is one very important consideration to keep in mind: Although the plans themselves are standardized, the premiums are not. In fact, the costs can vary widely, even by hundreds of dollars, from one insurer to the next. That means it is vital to shop around not only for the plan best suited to your needs but also for cost.