A client recently came to me and asked the simple question, “Do I have to accept Medicare Coverage when I turn 65?” As with most answers you might get from an Elder Law Attorney, my answer to her was the not-so-simple, “No, but you should.”
To make things easier, let’s talk about Medicare Part A: Medicare Part A covers your basic hospital care. It’s also free coverage. Normally, you automatically become enrolled in Medicare Part A when you apply for Social Security retirement benefits. If you are 65 and not yet receiving Social Security retirement benefits, you can still enroll in Medicare Part A by filing a form with your local Social Security Office. So, if you are still working or don’t plan on applying for your earned Social Security benefits, you do not have to enroll in Medicare Part A. The problem is that you can’t opt out of Medicare Part A and continue to receive Social Security retirement benefits. In fact, if you are already receiving Social Security retirement benefits, you’ll have to pay back all the benefits you’ve received so far in order to opt out of Medicare Part A coverage. That’s not usually an option as most people rely on those monthly payments to cover their bills.
The more important question, and what my client was really asking me was, “Can I opt out of Medicare Part B and not have to pay those premiums?”
Again, I answered with the standard, “Yes, but…”
First, the “Yes” part: Medicare Part B is what most people consider the “health insurance” part of Medicare. Part B has premiums that are deducted from your Social Security retirement benefits every month. You are not required to have Part B and are allowed to opt out of it. You will need to do that right when you get your Medicare card in the mail, otherwise you will have to pay the premium for all the months you were covered.
Second, the “but…” part: If you don’t have other health insurance coverage (usually from your employer or your spouse’s employer), Part B will be your primary health insurance. You will need to enroll during the seven months surrounding your 65th birthday, or during a Special Enrollment Period. A Special Enrollment Period opens up when employer sponsored group health coverage ends, as long as it through the employment of you or your spouse. If it is a retiree plan based on previous employment, a Special Enrollment Period will not apply. If you don’t enroll when you are first eligible, or during a Special Enrollment Period, you will pay a penalty. That penalty could increase your premiums by 10% for each 12 months that you could have had Part B coverage but didn’t. This means that if you opt out of Part B at 65, but decided to enroll at 68, your premiums could be 30% higher for the rest of your life.* If you are worried that you won’t be able to afford the Part B premiums because you will need your entire Social Security retirement check to cover your monthly bills, it is possible that you can receive assistance from your State in paying those premiums. So, if you do not have other health insurance coverage, I think you should enroll in Part B. But, it’s still up to you to decide.
The information that these recommendations are based on is located at www.medicare.gov, which was accessed on May 24, 2016. Please be aware that rules and laws may change.
*This article does not cover potential Affordable Care Act (“ObamaCare”) penalties that may arise due to lack of health insurance coverage
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