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Editor's note: This is the second in a series of three stories on Medicare. The first part compares the relative benefits of original Medicare and Medicare Advantage. The third part looks at prescription drug plans.

If you decide to go with original Medicare, then you really need to consider purchasing Medicare supplement insurance (sometimes referred to as Medigap or Medsup). These policies are purchased from private insurers, but coverage is standardized across a choice of 12 plans, labeled A through L. Plans cover gaps such as deductibles, hospital co-payments, and the 20% physician co-insurance not covered by Part B.

The table below outlines the different coverage for each of the plans. Plans C and F, which average roughly $1,900 a year in premium, are the most popular. They both include the Part B deductible, and plan F includes coverage for excess charges above Medicare rates. Two new plans, K and L, were introduced in 2006 as lower-cost options, but there's a catch: You will be responsible for a larger portion of your medical bills compared with the other plans.

Since the plans are standardized, its relatively easy to compare them: all Medigap insurers offer the same exact policies (though some companies may not offer all 12 plans). If you live in Wisconsin, Massachusetts or Minnesota, different types of plans are sold, but they are still standardized.

An analysis performed by Ratings on 2007 premium rates from 170 insurers found the average price per plan to be as follows:

Insurers adjust rates on the basis of state and the price method used, but even when comparing policies within a state using the same price method, there are still considerable pricing differences among insurers. Consider the following examples for a 65-year-old female:

In Florida, Plan C costs $1,888 with Shenandoah Life Insurance Company, while Blue Cross Blue Shield of Florida issues the same policy for $2,824, representing nearly a 50% difference in cost. If you are a smoker though, the policy with Shenandoah will jump to $3,825 per year. "Select" policies, which limit your use of physicians to an approved network, will cost you less.

United Healthcare

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offers such a policy for $1,533.

In North Carolina, the cost of the popular Plan F ranges from $1,157 with Philadelphia American Life to $2,760 with

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Humana Insurance Company

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. In Texas, the same plan costs $1,237 with Sterling Investors Life and $2,782 with Medico Life Insurance.

The other component to consider is the financial strength of the insurer. You can follow

this link to the Ratings screener to find the rating on any insurance company. Ratings are based on a financial analysis covering profitability, capitalization, liquidity, investment safety and stability of the insurer and range from A, excellent, to E, very weak. (Caution: The ratings are assigned to the company,


to an insurance policy.)

Coming up next: Medicare Part D

Donna O'Rourke joined Weiss Ratings, now Ratings, Inc., in 1999, and is the senior analyst responsible for assigning financial safety ratings to health insurers and supporting other health care-related consumer products including Medicare supplement insurance, long-term care insurance and elder care information. She conducts industry analysis in these areas. She has more than 10 years experience in credit risk management and analyses. Previously she served as an assistant vice president at the Union Bank of Switzerland, where she analyzed hedge funds, insurance companies and structured products in support of the derivatives and foreign exchange businesses. She holds a bachelor of science in management from Binghamton University and a master's of science in health systems administration from the Rochester Institute of Technology.

While O'Rourke cannot provide investment advice or recommendations, she appreciates your feedback;

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to send her an email.