If you're turning 65 or older in 2026, one financial move on your to-do list may be to enroll in Medicare. If you'll be leaving your job or losing health coverage through a spouse's employer, it's important to sign up for Medicare right away to ensure that you don't have an interruption in insurance.
But in addition to signing up for Medicare, there's another key move you may want to make this year. It's a move that could save you a lot of money on healthcare expenses throughout retirement.
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Why it pays to sign up for Medigap
One big misconception about Medicare is that it offers free healthcare for seniors. Not only are there monthly premiums associated with Medicare, but there are also deductibles, copays, and coinsurance to grapple with.
In fact, one major issue some seniors contend with is that Medicare does not put a cap on annual out-of-pocket spending. If you have a year with a lot of medical bills and you're on a limited income of Social Security and modest retirement plan withdrawals, your costs could quickly become overwhelming.
That's why signing up for Medigap right away is a smart idea.
Medigap plans serve as supplemental insurance for Medicare enrollees. Medigap won't cover services that Medicare itself won't, like dental cleanings or eye exams. What Medigap will do, however, is help pay for many of the expenses you might incur under Medicare, including:
- Inpatient deductibles for hospital stays
- Daily coinsurance for an extended hospital stay or skilled nursing facility
- Coinsurance for Part B services
Don't wait too long to get Medigap coverage
Just as you have an initial Medicare enrollment window, so too do you have an initial Medigap enrollment window.
Your initial Medicare enrollment period spans seven months, starting three months before the month of your 65th birthday and ending three months later. With Medigap, your initial sign-up window lasts six months, and it starts the first day of the month you're 65 and enrolled in Part B.
During that window, Medigap insurers must sell you a policy without medical underwriting at their best available rates. If you wait beyond that window to buy a Medigap plan, you risk getting denied or getting stuck with much higher rates.
Now one thing you should know is that Medigap is only compatible with original Medicare, not Medicare Advantage. But if you're sticking with original Medicare, it makes sense to put Medigap coverage in place early on. It could spare you a world of financial stress throughout retirement, especially if you have chronic health issues that may cost a lot of money to treat.
