All Americans who are age 65 and over are eligible for Medicare. Those who receive Social Security benefits are automatically enrolled in Medicare. Therefore, participation in Medicare really is not optional. However, you may be able to opt out of parts of Medicare, provided that you have health insurance coverage from another private insurance carrier.
If you or your spouse plan to continue working past age 65 – and your (or your spouse’s) employer will continue to provide health and prescription drug coverage – then you could be allowed to opt out of enrollment in Medicare Part B (Medical Insurance) and Medicare Part D (prescription drug coverage).
However, opting out of Medicare Part B without a valid reason can lead to a 10 percent penalty being added to your Part B premium when you do sign up at a later date – and that penalty will remain on your premium going forward. This can result in much more costly Medicare premiums in the future.
If opting out of Medicare Part B is the right choice for you, there are a couple of options for going about doing so. First, when you turn 65, you will receive a “Welcome to Medicare” information packet in the mail. The packet will contain a form to fill out for informing Medicare that you are opting out of Medicare Part B. Alternatively, you can contact Medicare directly via phone at 1-800-MEDICARE.
As with Medicare Part B, you also have the option of opting out of Part D, Medicare’s prescription drug coverage. Provided that you currently carry coverage through an employer plan or you have some other form of creditable prescription drug coverage, you will not face a penalty when you sign up for this coverage later.
However, without a valid reason, you can also face a late penalty on your future Part D premiums. In some cases, the penalty could add a significant amount to the monthly Part D premium that you will pay. Therefore, prior to moving forward with any type of decision, be sure that you weigh out all of the potential costs and benefits.
Generally, if an individual is receiving either Social Security retirement or disability benefits, it is not allowable to opt out of Medicare Part A. The only way to do so would be to withdraw one’s application for retirement or disability benefits from Social Security. However, if such benefits have already been received, it may be possible that the applicant could be required to pay the benefits back. In most instances, because Medicare Part A is premium-free, it does not make sense to opt out of this program.
In any case, it is important to ensure that you have a good understanding of how Medicare and your other insurance coverage will work together prior to opting out of any part of Medicare. Otherwise, you could be stuck paying a penalty, large medical bills, or both.
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