Key Points
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You might face numerous costs as a Medicare enrollee.
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If you stick to original Medicare, it pays to get a Medigap plan early on.
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Medigap could pick up the tab for deductibles and coinsurance, but it’s important to sign up as soon as you’re eligible.
A lot of people breathe a sigh of relief when they sign up for Medicare, thinking that from that point onward, their healthcare costs will be minimal. But there are numerous costs associated with Medicare, including premiums for Part B (and sometimes Part D and Medicare Advantage), coinsurance, and deductibles.
The problem is that while your monthly premiums may be fairly predictable (at least within each calendar year), it’s hard to estimate your remaining costs. After all, you don’t know what your healthcare needs will look like from year to year. But in some cases, you could be looking at thousands of dollars extra if you need a series of procedures or wind up admitted to the hospital.
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That’s why it’s important to enroll in Medigap as soon as you’re eligible. Medigap could spell the difference between affording your care under Medicare or struggling to keep up with your costs.
Why getting Medigap early matters
Medigap is supplemental insurance. It’s not compatible with Medicare Advantage. But if you’re enrolled in original Medicare, it’s an extremely important thing to have.
You may be aware that Medicare enrollees are typically responsible for deductibles, coinsurance, and copays. Medigap is designed to pay for many of those out-of-pocket costs. Depending on your plan, Medigap can cover hospital deductibles, coinsurance for a stay in a skilled nursing facility, and more.
However, the timing of your Medigap enrollment matters. When you first sign up for Medicare Part B, you’ll generally be eligible for a six-month Medigap initial enrollment period.
During this time, Medigap insurers must sell you a policy and cannot charge you more based on the state of your health. They also can’t deny you coverage based on pre-existing conditions.
Once that six-month window ends, though, the rules change. At that point, Medigap insurers may charge higher premiums for coverage or deny your application. So if you like the idea of having supplemental insurance to defray your out-of-pocket costs, you shouldn’t delay your Medigap enrollment.
A smart choice
Medigap isn’t free. You’ll generally have to pay a monthly premium for coverage, and the cost of that premium can vary depending on when you enroll and which plan you choose.
But all told, having Medigap could save you a significant amount of money in the course of retirement. It could also, to a pretty large degree, replace some of your unknown costs with a monthly premium that you work into your retirement budget. That makes Medigap a serious win, provided you enroll at a time when you’re more likely to secure affordable coverage.
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