Medicare Supplement Planning Before You Retire

The window is the decision

Most writing about Medicare Supplement coverage is about which plan to pick. That is the less consequential half of the subject.

Federal rules give you a Medigap open enrollment period that runs for six months, beginning when you are 65 or older and enrolled in Medicare Part B. Inside that window, a carrier must sell you any Medigap policy it offers, cannot refuse you for health reasons, and cannot charge you more because of your health history. That protection is called guaranteed issue.

Outside that window, the position changes. In most states, carriers may apply medical underwriting to a Medigap application, which means they can decline you or price the policy on your health. There are specific circumstances that restore guaranteed issue, and some states add protections of their own, but none of that is something to plan on discovering later.

The practical consequence is that this belongs on the calendar alongside your retirement date, not in the pile of things to sort out afterwards. If your Part B start date is tied to leaving employer coverage, the two decisions are connected and worth mapping together.

What "standardized" means

Medigap policies are sold by private insurers but the benefit packages are set by federal standardization. A plan sold under a given letter must provide the benefits assigned to that letter. Plan G from a large national carrier and Plan G from a small regional one cover the same items.

That has a useful implication and a limit. The useful implication is that comparison shopping on a Medigap plan is genuinely a comparison of price, rate history, and service, because the coverage question is already settled by the letter. The limit is that price differences between carriers for identical coverage can be substantial, and how a carrier has raised rates on existing policyholders over time is not printed on the brochure.

Three states, Massachusetts, Minnesota, and Wisconsin, standardize their plans differently. Illinois follows the letter system described here.

The letters, and the two that closed

The currently standardized plans run across a set of letters, and they differ in how much of the Medicare cost-sharing they absorb. Plans with fuller coverage carry higher premiums; plans that leave more to you carry lower ones.

Two of them are closed to new entrants. Legislation prohibited the sale of Medigap plans covering the Part B deductible to anyone first eligible for Medicare on or after January 1, 2020, which took Plans C and F off the table for that group. People who were eligible before that date and already hold a Plan C or F may generally keep it, and in some cases may still buy one. For everyone newly eligible, Plans D and G occupy the nearest equivalent positions.

Two plans, K and L, work differently from the rest. Rather than covering a defined list of items in full, they cover a percentage of costs and then cap your out-of-pocket exposure for the year, after which they pay in full. High-deductible versions of Plans F and G also exist, where you pay a set annual amount before the policy begins paying.

Every one of those thresholds, deductibles, and out-of-pocket limits is indexed and revised annually. Any figure you read in an article, including a figure from last year's version of this one, needs checking against the current year before it informs a decision.

What Medigap does not cover

The gaps in the gap coverage are where people are most often surprised.

• Prescription drugs. Medigap policies sold today include no drug benefit. Part D is a separate plan with its own premium, formulary, and enrollment rules.
• Long-term custodial care. Medicare covers skilled care under defined conditions and for limited periods. It does not cover ongoing help with daily living, and neither does Medigap. This is the single largest uncovered exposure in most retirement plans.
• Routine dental, vision, and hearing. Generally outside both Original Medicare and Medigap.
• Your spouse. Policies are individual. Two people need two policies, priced separately.

On the long-term care point specifically, the planning response sits outside Medicare entirely. It involves some combination of dedicated coverage, earmarked assets, and a frank conversation about what care at home versus care in a facility would actually look like for your household. Products in that area are transacted through licensed affiliates and carry their own contract terms, which are worth reading closely before anything is signed.

Medigap or Advantage, not both

Medicare Advantage, or Part C, is a different structure rather than a different plan. An Advantage plan replaces the way you receive Original Medicare benefits, is administered by a private insurer, and commonly bundles drug coverage and extras. Medigap, by contrast, sits alongside Original Medicare and pays part of what Original Medicare leaves.

You cannot use both. Choosing one closes the other for that period, and the switch back is where the enrollment timing above becomes consequential: moving from Advantage to Original Medicare plus Medigap later may put you in front of medical underwriting.

Neither path covers long-term custodial care. Compare on total expected cost and provider access together, not premium alone.

Part D sits separately

Part D is standalone prescription coverage that pairs with Original Medicare and a Medigap policy. Plans differ by premium, deductible, and formulary, and the formulary is the part that matters most if you take maintenance medications.

Formularies change annually. A plan that covered a drug at a low tier this year may move it or drop it next year, which is why the annual enrollment period is worth using as a genuine review rather than a default renewal. Checking your current prescriptions against next year's formulary takes an afternoon and is one of the few reliably worthwhile annual chores in retirement.

Where this touches the income plan

Two connections are worth naming, both covered in more depth elsewhere.

The first is premiums. What you pay for Part B and Part D is affected by income reported two years earlier, so a withdrawal or conversion made now can raise a premium in a later year. We work through that mechanism in coordinating income, Medicare, and investments.

The second is cash flow. Medigap and Part D premiums are a fixed monthly cost that rises over time, and they belong in the projection as a growing line rather than a footnote. Health coverage is frequently the largest single expense category a retirement plan has to absorb.

This practice is founder-led and based in Palos Heights. Richard Casolari has spent roughly fifty years in financial services, and the work coordinates retirement income planning, investment management, tax-aware withdrawal sequencing in coordination with your CPA, Medicare enrollment and supplement timing, and protection planning through licensed affiliates, into one written plan.