When should you buy Medicare supplemental insurance?

Navigating the complexities of healthcare in retirement can be a daunting task. And, while Medicare provides essential coverage for many seniors, it may not cover all your healthcare expenses, like your copays, coinsurance and deductibles. Those costs can add up quickly and become a big issue — especially if you're on a limited budget. 

That's where Medicare supplemental insurance, often referred to as Medigap, comes into play. Medicare supplemental insurance is a type of private health insurance that's designed to work alongside Medicare. Medigap policies help fill in the coverage gaps by covering some or all of the extra healthcare expenses, depending on the plan. 

But when is the right time to purchase a Medicare supplemental insurance policy? That's what we'll explore below.

Compare your Medicare supplemental insurance plan options here to find the right one for you.

When should you buy Medicare supplemental insurance?

For most people, it typically makes sense to purchase a policy at these times:

During your initial enrollment period

The best time to purchase a Medigap policy is typically during your initial enrollment period (IEP), according to Medicare.gov. Under federal law, your IEP begins when you're 65 and enrolled in Medicare Part B.

The main benefit of enrolling during your IEP is that during this six-month period, insurers cannot deny you coverage or charge higher premiums based on your health status or pre-existing conditions. That can keep the costs down on your Medicare supplemental insurance policy and ensure that you're not limited in terms of your policy options. 

If you wait, though, it could cost you, as the premiums on this type of coverage will typically increase as you get older.

Find the right Medicare supplemental insurance plans for you here.

When you have a guaranteed issue right

Outside of your IEP, you can still purchase a Medicare supplemental insurance policy if you have a guaranteed issue right. Guaranteed issue rights are federal protections that prevent insurance companies from denying you a Medigap policy or charging you higher premiums based on your health status or pre-existing conditions. 

These rights are granted during specific circumstances, allowing you to enroll in a Medigap plan without undergoing medical underwriting. Several situations can trigger guaranteed issue rights, including:

• Medigap plan discontinuation: If your Medigap insurance company goes bankrupt, stops offering coverage in your area or otherwise discontinues your specific plan, you have a guaranteed issue right to choose a new Medigap policy.
• Losing other coverage: If you had other health coverage and you lose that coverage through no fault of your own (e.g., due to retirement or employer discontinuation), you have guaranteed issue rights to purchase a Medigap policy within a specific timeframe.
• Medicare Advantage plan changes: If you were enrolled in a Medicare Advantage plan when you first became eligible for Medicare and you switched to Original Medicare within the first year, you may have guaranteed issue rights for Medigap coverage.
• Moving out of your plan's service area: If you had a Medigap policy and you move out of your plan's service area, you may have guaranteed issue rights to buy a new Medigap policy in your new location.

During the annual enrollment period

You also have the option to purchase a Medigap plan during Medicare open enrollment, also known as the annual enrollment period (AEP). This period occurs from October 15 to December 7 each year. 

During this period, eligible individuals can make changes to their Medicare coverage, and if you're considering a Medigap policy, you can apply for one during this period. However, it's important to note that Medigap policies may have different open enrollment periods depending on your state. 

During your state's open enrollment period

In addition to the federal open enrollment period, some states offer additional open enrollment periods (OEPs) for Medigap policies. These state-specific OEPs may allow you to purchase a policy at various times throughout the year, providing flexibility outside the federal IEP. 

The rules and protections offered during state OEPs can vary, though, so it's essential to check with your state's insurance department or a qualified insurance agent to understand the specific regulations in your area.

The bottom line

Deciding when to buy a Medicare supplemental insurance policy depends on various factors. It makes the most sense to enroll during your initial federal enrollment period or any state open enrollment period you qualify for, as these periods can protect you from being denied coverage or being charged more due to health reasons. However, it's also possible to enroll if you have guaranteed issue rights to do so. But no matter when you decide to purchase a policy, it's typically worth considering, as Medicare supplemental insurance can provide peace of mind and financial security as you embark on your retirement journey.