Is Medicare mandatory?
From: www.medicalnewstoday.com
Medicare is not mandatory, but opting out means losing
Social Security benefits and facing a penalty for late enrollment. People with employer-based insurance may be able to delay enrollment in Medicare without penalties.
Medicare is a federal benefit that people contribute toward through taxes while they are working. A person is eligible to enroll in Medicare when they are 65 years old or have certain disabilities or health conditions.
Original Medicare comprises Part A (hospitalization insurance) and Part B (medical insurance). Most people are automatically enrolled in Part A once they turn 65. Part B is voluntary and requires paying a monthly premium.
This article discusses whether enrollment in Medicare parts A and B is mandatory. It also looks at alternatives, including employer-based health insurance and possibly delaying participation in Medicare Part B.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
- Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Is Medicare mandatory?
Enrolling in Medicare Part A is mandatory for people ages 65 and over who receive Social Security benefits. Enrollment in Part B is voluntary. Most people choose to have either Part B coverage or a private health insurance policy that covers medical expenses.
Part A
Most people are automatically enrolled in Part A once they turn 65, but some need to enroll if they are still working or not receiving Social Security benefits. By law, people cannot voluntarily terminate their Part A coverage unless they pay a premium. Part A coverage ends only in these situations:
- a person loses their entitlement to Social Security or railroad retirement board benefits
- the person dies
Part B
People who have been receiving Social Security benefits for at least 4 months before becoming eligible for Medicare will be automatically enrolled in parts A and B. They can choose whether to keep or decline Part B.
Those not receiving Social Security benefits will not be automatically enrolled in Part B. They can voluntarily enroll and pay the monthly premium or choose not to.
Medicare enrollment periods
There are several Medicare enrollment periods, including:
- initial enrollment period (IEP)
- general enrollment period
- open enrollment period
- special enrollment period (SEP)
During these enrollment periods, a person can take several actions, such as enrolling for Original Medicare (parts A and B), switching plans, or enrolling in new ones.
Late penalties
During the IEP, a person can enroll in Original Medicare (parts A and B). The IEP includes:
- the 3 months before the month of the person’s 65th birthday
- their birthday month
- the 3 months after their 65th birthday month
A person who enrolls after the IEP may incur a late enrollment penalty fee.
If a person does not enroll in Medicare Part B when they are first eligible, they can do so during a SEP, depending on certain conditions.
Is Medicare mandatory if I’m still working after 65?
If people continue working after they turn 65 and they or their spouse have qualifying group health coverage through an employer, they can delay enrolling in Original Medicare.
However, some employees choose to enroll in Medicare Part A and delay enrolling in Part B (medical insurance) and Part D(prescription drug coverage). In general, a person does not pay a premium for Part A.
The decision to combine Medicare coverage with employer-based insurance depends on several factors, including:
- the reason the employee is eligible for Medicare
- if the employee or their spouse (or family member if they have a disability) is still working
- if the employee has a group health plan through their employer
Primary and secondary employer-based insurance
A person’s job-based insurance may allow them to delay Medicare enrollment, depending on whether the employer’s insurance pays primary or secondary.
The primary payer pays first for healthcare up to the plan limits. Any outstanding amount will go to the secondary payer.
Employer-based insurance is primary if it is provided by an employer with over 20 employees. In that case, Medicare is secondary, meaning a person could delay enrollment in Part B.
Employer-based insurance is secondary if it is provided by an employer with fewer than 20 employees. In that case, the employer-based insurance may provide only minimal coverage, and a person may want to enroll in Medicare Part B to avoid high medical costs.
A person or their spouse can contact the company’s human resources department to find out if their employer’s insurance is primary or secondary.
Switching from Medicare to an employer’s health plan
If a person enrolled in Medicare during their IEP, they can take one of several actions:
- They may drop Medicare and join their employer’s qualifying health plan.
- They may choose to keep Medicare while joining their employer’s large-group health plan. In this case, Medicare is secondary insurance.
How to delay enrolling in Part B
If a person intends to delay enrollment in Part B and then use a SEP to participate at a later date, they should keep a detailed record of their employer-based health coverage, as Medicare will require proof of enrollment in employer-based insurance.
Documents that may serve as proof of enrollment in an employer-based insurance plan include:
- a written notice from a person’s employer or health plan
- documents showing evidence that the person paid their employer-based insurance premiums, such as pay stubs, W-2s, tax returns, or receipts for health services
- health insurance cards showing accurate coverage dates
- Form 1095-A Health Insurance Marketplace Statement
Summary
Enrollment in Medicare Part A is mandatory for people who receive Social Security benefits. Enrollment in Part B is voluntary.
Employer-based health insurance can provide an alternative to Medicare, though a person needs to consider if their employer-based insurance is the primary or secondary insurance.
A person can delay enrollment in Part B, but they should keep a record of their employer-based health coverage during this time.
A person who enrolls in Medicare during their IEP can choose to also enroll in their employer’s qualifying health plan.
