Is Medicare Mandatory?
Medicare isn’t mandatory, but disenrolling from the program is complicated, and there are consequences for terminating coverage. You may face lifetime penalties if you delay signing up for Medicare at age 65 and try to enroll later.
Is it Mandatory to Sign Up for Medicare?
While signing up for Medicare isn’t technically required, there are serious financial penalties and consequences for delaying or forfeiting coverage.
Most people sign up for Medicare or are automatically enrolled in the program around their 65th birthday. This is known as your initial enrollment period, and it begins three months before you turn 65, includes your birth month and extends three months after that.
But what if you want to delay Medicare until later — or refuse it completely?
If you receive group health insurance through your employer or your spouse’s employer — and that employer has at least 20 employees — you can delay Medicare enrollment without facing penalties.
You can voluntary disenroll from Medicare Part A and Part B by completing and mailing a form to the Social Security Administration.
You can’t refuse or postpone Medicare Part A if you already receive Social Security benefits — unless you’re willing to forfeit your Social Security checks forever.
The U.S. Centers for Medicare & Medicaid Services strongly recommends signing up for Medicare Part A hospital insurance when you’re first eligible at 65, even if you have health insurance from an employer or union.
That’s because most people paid Medicare taxes during their career, and therefore don’t owe a monthly premium for Part A. It’s free coverage essentially.
However, you may want to delay Medicare Part A if you’re required to pay a premium. While most people get Medicare Part A premium-free, it costs up to $471 per month in 2021 for people with fewer than 10 years of work history.
You may also consider postponing enrollment if you’re still contributing to a health savings account. Once you enroll in any part of Medicare, you can no longer fund an HSA.
If you’re eligible for premium-free Part A, there’s no penalty for delaying Part A, and you can enroll any time after you’re first eligible for Medicare.
There are limited situations that allow you to delay enrolling in Part B.
If you’re actively working and receive group health insurance through an employer — or your spouse’s employer — you may be able to delay signing up for Part B without paying late enrollment penalties.
Your employer must have at least 20 employees and provide you with qualifying coverage. Otherwise, you’ll likely face a penalty when your workplace coverage ends and you sign up for Medicare.
You should start your Part B coverage as soon as you stop working or your current employer coverage ends — whichever comes first.
Most people with Tricare who enroll in Medicare Part A must also enroll in Part B in order to keep their Tricare benefits.
- You are an active-duty service member.
- You are an active-duty family member.
- You are enrolled in Tricare Reserve Select, Tricare Retired Reserve, Tricare Young Adult or the US Family Health Plan.
You can voluntarily terminate your Part B coverage by filling out Form CMS-1763 and submitting a written request to the Social Security Administration.
Signing up for Medicare Part C, better known as Medicare Advantage, is never mandatory.
Medicare Advantage plans serve as an alternative to Original Medicare (Part A and Part B). These plans are administered by private health insurance companies that contract with the federal government.
Plans must provide the same level of care as Original Medicare but may also bundle other benefits into a single plan, such as prescription drug, dental and vision care.
Medicare Part D isn’t mandatory, but there are penalties for signing up late.
You can receive these benefits through either a standalone Part D plan or a Medicare Advantage plan with prescription drug coverage. Each Medicare drug plan can vary in cost and specific drugs covered.
If you decide not to get Part D coverage when you’re first eligible, and you don’t have creditable employer or union coverage, you’ll likely pay a late enrollment penalty if you join a plan later.
Typically, you’ll pay this penalty for as long as you have Medicare drug coverage.
You have 63 days to enroll in Medicare drug coverage after your creditable employer health insurance ends, or you’ll face a penalty.
It’s important to note that people in the low-income Extra Help program don’t pay the Part D late enrollment penalty.
How to Defer Medicare
In most cases, you or your spouse must be actively working for an employer that provides your current health insurance in order to delay Medicare enrollment and qualify for a special enrollment period later.
Keep in mind that COBRA and retiree benefits from a current or former employer do not count as active creditable coverage.
You can defer Medicare enrollment until your workplace health insurance ends or you leave your job — whichever comes first.
When your workplace coverage stops, you’ll qualify for a special enrollment period of up to eight months when you can sign up for Medicare Part B without facing late enrollment penalties.
There are other times you can change your Medicare coverage, too, including during the general enrollment period and open enrollment period — but you may face a penalty if you wait until one of these enrollment periods.
It’s best to speak with your workplace benefits administrator if you’re still working and want to delay Medicare until retirement.
Your workplace human resources department can help you determine whether your current health insurance qualifies as creditable coverage and if it makes sense to defer Medicare enrollment at 65.
There is another limited situation when you can delay signing up for Medicare Part A and/or Part B. If you live overseas when you turn 65 and don’t qualify for premium-free Part A, you’ll have two months to sign up for Medicare once you return to the United States.
Veterans who receive VA benefits or Tricare should still sign up for Medicare when they’re first eligible.
VA benefits and Tricare aren’t considered active employer insurance, so if you don’t sign up for Medicare at 65, you’ll owe a penalty later. The Department of Veterans Affairs strongly recommends veterans enroll in Medicare when they turn 65.
Medicare Penalties for Not Enrolling
Before you decide to postpone enrollment in any part of Medicare, it’s important to understand the late enrollment penalties and limitations that can apply in the future.
- Part A
- If you have to buy Part A and you don't sign up when you're first eligible for Medicare, your monthly premium can increase by 10 percent. You'll owe this higher premium for twice the number of years that you didn't sign up.
- Part B
- The Part B late enrollment penalty increases your monthly premium up to 10 percent for each 12-month period you could've had Part B but didn't sign up. In most cases, you're required to pay this penalty for as long as you have Part B.
- Part D
- Medicare calculates the Part D penalty by multiplying 1 percent of the national base beneficiary premium — $33.06 in 2021 — by the number of full months you didn't have Part D or creditable coverage. You will pay the penalty as long as you have Medicare drug coverage.
Typically, you can avoid penalties if you delay enrollment because you (or your spouse) are still working and receive creditable health insurance from an employer health plan.
Can You Decline Medicare Coverage?
Under federal law, a Medicare enrollee can voluntarily terminate Part B. You can also terminate Part A if you are required to pay a premium for coverage.
You must complete Form CMS-1763 and file a written request with the Social Security Administration to terminate your benefits.
The form takes about five minutes to complete, and you will be required to provide a reason for terminating coverage.
You will also be required to undergo an in-person or telephone interview with a Social Security Administration representative before your request is processed.
If you change your mind and decide you want to keep your Part A insurance, you can do so by filling out this form and mailing it to the Social Security Administration.
To find out more about how to terminate Medicare or to schedule a personal interview with the Social Security Administration, call 1-800-772-1213 or contact your nearest Social Security office.
11 Cited Research Articles
- Social Security Administration. (2020, December 3). How do I terminate my Medicare Part B (medical insurance)? Retrieved from https://faq.ssa.gov/en-us/Topic/article/KA-02713
- Department of Veterans Affairs. (2020, April 20). VA health care and other insurance. Retrieved from https://www.va.gov/health-care/about-va-health-benefits/va-health-care-and-other-insurance/
- O’Brien, S. (2020, February 11). How to delay or ditch Medicare and pick it up later without paying penalties. Retrieved from https://www.cnbc.com/2020/02/11/how-to-drop-or-delay-medicare-until-later-without-paying-penalties.html
- AARP. (n.d.). Do I have to enroll in Medicare if I continue to have health coverage after age 65 from my own or my spouse’s employer? Retrieved from https://www.aarp.org/health/medicare-qa-tool/do-i-enroll-in-medicare-age-65-even-if-still-working/
- AARP. (n.d.). How much is the late enrollment penalty for Medicare Part A? Retrieved from https://www.aarp.org/health/medicare-qa-tool/how-much-is-the-part-a-late-enrollment-penalty/
- Centers for Medicare & Medicaid Services. (n.d.). Deciding Whether to Enroll in Medicare Part A and Part B When You Turn 65. Retrieved from https://www.cms.gov/Outreach-and-Education/Find-Your-Provider-Type/Employers-and-Unions/FS3-Enroll-in-Part-A-and-B.pdf
- Medicare.gov. (n.d.). How to get prescription drug coverage. Retrieved from https://www.medicare.gov/drug-coverage-part-d/how-to-get-prescription-drug-coverage
- Medicare.gov. (n.d.). Part A late enrollment penalty. Retrieved from https://www.medicare.gov/your-medicare-costs/part-a-costs/part-a-late-enrollment-penalty
- Medicare.gov. (n.d.). Part B late enrollment penalty. Retrieved from https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty
- Medicare.gov. (n.d.). Part D late enrollment penalty. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
- Medicare.gov. (n.d.). Should I get Parts A & B? Retrieved from https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/should-i-get-parts-a-b