Medicare Part A and B are not mandatory. However, very few people will have no Medicare coverage at all – ever. You may have good reasons to want to delay signing up, though. You would only really have an issue when it came to certain scenarios which we will discuss below.
Some Reasons to Delay Medicare Part A
One key reason to delay Medicare Part A (hospital insurance) is that you may want to keep contributing to a health savings account (HSA) which allows you to save money tax-free. Once you enroll in any part of Medicare – even if it’s only premium-free Part A – you can no longer put money into an HSA.
You can still use the funds to pay for qualified health care costs though. (Note: You can’t refuse or delay Part A if you receive Social Security benefits unless you forfeit your benefits.)
Check with your plan benefits administrator about your options. If you do decide to delay, you’ll want to first make sure you’ll qualify for a Medicare Special Enrollment Period when your employer insurance ends. If you don’t, you may have to pay late enrollment penalties.
Another reason you might want to delay Part A is you can’t get it premium-free. People who have to pay a premium for Part A may consider delaying enrollment to avoid the expense. Part A charges a penalty for late enrollment, though. An alternative, in this case, is to get a Marketplace plan instead of Medicare.
Why Do Some People Pay For Medicare Part A?
Part A is free for most people. You usually don’t pay a monthly premium for Part A coverage if you or your spouse worked and paid Medicare taxes while you were employed.
You may have to pay a premium for Part A coverage if:
· You didn’t work or pay Medicare taxes long enough.
· You’re a railroad worker or you have certain other coverage.
· You have End-Stage Renal Disease (ESRD) and you didn’t buy Part A when you first became eligible.
Is There a Penalty To Delay Medicare Part A?
Part A has a late enrollment penalty if you don’t sign up for it when you’re first eligible.
You’ll have to pay the penalty for each 12-month period that you could have had Part A, but didn’t sign up. The late enrollment penalty is usually ten percent of the Part A premium.
When Will I Be Eligible for Medicare?
You’re eligible for Medicare when you turn 65. If you’re under 65, you may still be eligible if:
· You have a disability, or
· You have End-Stage Renal Disease (ESRD) or Lou Gehrig’s disease.
If you’re not receiving Social Security or Railroad Retirement Board benefits, you will need to sign up for Medicare.
You can sign up during the seven-month period that begins three months before your 65th birthday, includes your birthday month, and ends three months after your 65th birthday.
If you are receiving Social Security or Railroad Retirement Board benefits, you will be automatically enrolled in Medicare Part A and Part B starting the first day of the month you turn 65. If you don’t want Part B, follow the instructions that come in your welcome packet to opt-out.
When is Medicare Part B Mandatory?
Part B is optional, but we recommend that you enroll in Part B when you’re first eligible. If you decide not to enroll in Part B when you’re first eligible and later decide that you want coverage, you may have to pay a late enrollment penalty for as long as you have Part B.
You can sign up for Part B during the eight-month period that begins the month after your 65th birthday or, if you’re already getting benefits from Social Security or the Railroad Retirement Board, you will be automatically enrolled in Part B starting the first day of the 25th month after you become entitled to Social Security benefits.
What Happens If I Delay Medicare Part B?
If you decide not to enroll in Part B when you’re first eligible, and later decide that you want coverage, you may have to pay a late enrollment penalty fee of 10% for the life of your Medicare Policy or as long as you have Part B.
There are some programs out there to offset the mandatory penalties. That would be qualifying for Medicaid. The other would be going into a Medicare Advantage Plan that had a give-back program. This program would pay a portion of your Medicare mandatory penalty or just your part B premium.
Navigating Medicare and what is Mandatory is a slippery slope. That is where we come in. We will be able to look at your situation and give you prudent advice on how to proceed. We look forward to hearing from you.