Gap Employees: The Health Care Reality Many Retirees Don’t Expect

'Gap employees approaching retirement are often surprised by the health care costs that can still arise after Medicare begins, which is why it's important to evaluate potential medical expenses early so health care planning becomes a thoughtful part of an overall retirement strategy.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement. 

'Many Gap employees approaching retirement underestimate how health care expenses may continue even after Medicare begins, underscoring the need to consider health care costs as part of broader retirement planning discussions.' – Brent Wolf, CFP®, a representative of The Retirement Group, a division of Wealth Enhancement. 

In this article, we will discuss:

1. How Medicare impacts retiree health care planning.

2. Common coverage gaps and unexpected health care expenses.

3. Why early retirement health care planning matters.

by Brent Wolf, CFP®, Wealth Enhancement

As retirement approaches, many Gap employees believe that health care expenses may become easier to manage once they reach Medicare eligibility age. However, this assumption can sometimes overlook the complexity of health care costs later in life.

Medicare plays an important role in the U.S. health care system for retirees. Eligibility generally begins at age 65, although some individuals may qualify earlier due to certain disabilities or medical conditions. Many Gap retirees rely on Medicare coverage as one component of managing health care expenses during retirement.

However, Medicare does not cover every medical cost. Deductibles, premiums, coinsurance, and certain uncovered services remain part of the program. Because of this, retirees—including those who previously worked for Gap—may still experience out-of-pocket medical expenses even after enrolling in Medicare.

Health Care Expenses May Still Be High

Health issues later in life can create financial pressure for retirees. Depending on the type of treatment required, out-of-pocket expenses may still arise even for individuals with Medicare and other insurance coverage. Gap employees approaching retirement may find it helpful to become familiar with these potential health care costs earlier in the planning process.

Certain serious medical conditions may require long-term treatment and ongoing care. For example, cancer treatment often involves hospital stays, specialized therapies, and ongoing medical management. Serious illnesses like these can create financial challenges for individuals and families.

Even when insurance plans cover a portion of these expenses, some health care costs may still fall to the patient. Conditions requiring long-term treatment, therapy, or specialized medical support may result in continued financial strain for retirees.

Coverage Gaps That Retirees Need to Know

While Medicare provides valuable coverage, it was never designed to pay for every health care expense retirees may face. For Gap employees evaluating retirement readiness, understanding these coverage gaps can be an important consideration.

One example is long-term care. Medicare generally does not cover custodial care when assistance with daily activities—such as eating, dressing, or bathing—becomes the primary need. ¹  Many Gap retirees may eventually encounter situations where this type of support becomes necessary.

Medicare also typically does not cover full-time custodial care or 24-hour home care. ²  Certain home health services may be covered if specific eligibility requirements are met, but many services remain outside Medicare coverage.

Because of these limitations, some health care needs later in life may still require significant out-of-pocket spending. For retirees living on a fixed income, these unexpected medical expenses can create financial stress.

Why Retirement Health Care Planning Is Important

Health care needs often increase with age. Research shows that many individuals who reach age 65 will require some form of long-term support during the remainder of their lives. ³  This is why retirement planning discussions among Gap employees frequently include health care cost considerations.

Planning ahead for health care expenses can help retirees better understand possible financial scenarios in the future. Considering these costs early can provide greater clarity about how health care may affect retirement income.

Planning for health care does not mean medical issues will occur—or that they can always be prevented. However, it may help individuals and families think through potential financial impacts and consider different possibilities that could arise later in retirement.

Greater Awareness Can Increase Confidence

Retirement planning is not about forecasting the future with certainty. Instead, it focuses on developing strategies that help people navigate uncertainty, including future health care needs. Many Gap employees find that learning about potential risks can support more informed retirement decisions.

Understanding what Medicare covers—and what it does not—can help retirees evaluate how health care expenses may affect retirement income over time. This awareness can be a helpful step when developing a retirement strategy.

Getting Retirement Planning Assistance

Health care planning is an important part of retirement preparation, but it is only one element of a broader financial strategy. Retirement planning for Gap employees may also include considerations such as longevity risk, income planning, investment strategies, and maintaining stability throughout retirement.

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The Retirement Group can assist with retirement planning discussions if you would like help reviewing your financial strategy. Speaking with a financial professional may provide insight into how different scenarios could influence your long-term retirement plan.

For more information about retirement planning and to discuss your financial goals, call The Retirement Group at  (800) 900-5867 .

Sources:

1. Centers for Medicare & Medicaid Services.  Medicare & You 2026.  U.S. Department of Health and Human Services, 2026,  https://www.medicare.gov/publications/10050-medicare-and-you.pdf .

2. Social Security Administration.  Medicare.  U.S. Social Security Administration, 2026,  https://www.ssa.gov/pubs/EN-05-10043.pdf.  

3. Administration for Community Living.  How Much Care Will You Need?  U.S. Department of Health and Human Services, 18 Feb. 2020,  https://acl.gov/ltc/basic-needs/how-much-care-will-you-need .