Navigating the Complex World of Medigap and Credit Scores: What You Demand to Know in 2026
Understanding your healthcare and financial options can feel overwhelming. This week, Allworth Financial addresses common questions about Medigap insurance and the impact of missed credit card payments – issues impacting many Americans as they approach retirement and build their financial futures.
Medigap Insurance: Filling the Gaps in Medicare
Original Medicare (Parts A & B) doesn’t cover all healthcare costs. In fact, it typically covers around 80% of expenses, leaving beneficiaries responsible for the remaining 20%. This is where Medigap insurance, also known as Medicare Supplement Insurance, comes into play. Offered by private insurance companies, Medigap policies help cover costs like co-pays, co-insurance and deductibles.
Understanding the Medigap Open Enrollment Period
The best time to secure a Medigap policy is during your Medigap Open Enrollment Period. This begins the month you turn 65 and are enrolled in Medicare Part B. During this period, you’re guaranteed approval for any Medigap plan available in your state, regardless of your health. Missing this window doesn’t necessarily disqualify you, but approval isn’t guaranteed.
Currently, over 40% of Medicare beneficiaries already have a Medigap policy, demonstrating its value for many. Medigap policies are standardized, with plans denoted by letters of the alphabet, each offering varying levels of benefits and costs.
Pro Tip: Spouses each need to purchase their own individual Medigap policies. If you’re enrolled in a Medicare Advantage Plan, you are not eligible for a Medigap policy.
Comparing Medigap Plans
Choosing the right Medigap plan requires careful consideration. You can compare plans and benefits at medicare.gov.
The Impact of Missed Credit Card Payments on Your Credit Score
A good credit score is crucial for securing loans, mortgages, and even favorable insurance rates. But even a single missed credit card payment can significantly impact your score.
How Much Will Your Score Drop?
While credit agencies don’t publicly disclose their exact scoring formulas, data from Credit Karma suggests that someone with a credit score around 690 could spot a drop of 25 to 85 points for a payment more than 30 days late. The impact worsens with longer delinquencies – payments over 90 days late cause even more substantial damage.
Recovering from Missed Payments
The key to credit score recovery is consistent, on-time payments. Aim to use only 10-30% of your available credit each month. However, rebuilding your credit after missed payments takes time – typically around 18 months.
Did you know? Even a few days late can sometimes avoid a credit score impact, but it’s best to always pay on time.
Frequently Asked Questions
Q: Is Medigap insurance mandatory?
A: No, Medigap insurance is not mandatory, but it can be a valuable supplement to Original Medicare.
Q: Can I switch Medigap plans at any time?
A: You can switch plans, but it may be more challenging outside of your Open Enrollment Period and approval isn’t guaranteed.
Q: What’s the fastest way to improve my credit score after a missed payment?
A: Make all future payments on time, keep your credit utilization low (10-30%), and be patient.
Resources
For more information on Medicare and Medigap, visit medicare.gov.
Disclaimer: Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial, a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.
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