No, Medicare is not mandatory. It automatically covers seniors at the age of 65. Medicare is also automatic if you’ve been disabled, have End-Stage Renal Disease, or Lou Gehrig’s disease or ALS. You can sit still and do nothing, and your Medicare will kick in without you signing up for anything.
What you must sign up for is Medicare Part B, or medical insurance, and Part D, or prescription drug coverage. These needs can be met through the private sector. If you leave private insurance at some future time to return to Medicare coverage, you’ll pay a penalty. Why is Medicare not mandatory in some instances but automatic in others?
How Does Medicare Enrollment Work?
Let’s say you began working at age 22 when you graduated college. You may have changed jobs over the years, but you were working. Let’s say you retired or stopped working at the age of 65. That gives you 43 years of working.
During those years, you paid into FICA and Medicare along with all the other deductions like worker’s comp. Three months before you turned 65, you were contacted to sign up for Medicare Parts B and D. The hospitalization or Part A you receive automatically with no premium to be paid.
You have a choice. You can accept government health insurance, or you can purchase your coverage somewhere else. Private insurance companies carry policies that pay Part B premiums, separate prescription drug policies, and any deductibles. They’re called Medigap policies, and they also offer a Medicare HMO called Medicare Part C or Medicare Advantage. This takes care of everything but prescription drugs.
If Medicare Isn’t Mandatory, Then Why Are Seniors Accepting It?
The snag to accepting Medicare Parts B and D coverage is that if you don’t, you forfeit your SS benefits (you get Part A or hospitalization no matter what, and premium-free.) Those benefits are how seniors pay for rent, utilities, and groceries. Forfeiture would put them in dire straits. It’s easier to just accept Medicare.
Some seniors, though, delay accepting Medicare Part B and/or Part D due to using private insurance from their jobs. If seniors are still working at or past the age of 65, then it’s possible to skip Parts B and D until they actually stop working.
Is Medicare Cheaper Than Private Insurance?
When you’re weighing the benefits of private insurance over Medicare, you’ll compare these:
• If it helps to pay Medicare’s deductibles, premiums, coinsurance, and copays.
• Prescription drugs coverage or Part D coverage.
• If it covers additional needs such as dental, vision, and hearing.
With Medicare, you’ll pay the $170 premium out of your monthly SS check, which comes out to $2,040 per year. As of 2020, private insurance for an individual averages out to $456 per month or $5,472 per year. For a family, the monthly premium is $1,152 per month or $13,824 per year. It’s plain to see that Medicare is the less costly option.
Additionally, you’ll consider the price of the premium against the out-of-pocket costs. Consider also that the four levels of insurance plans (bronze, silver, gold, and platinum) rate differently, from you paying ten percent of all charges up to paying 40 percent of all charges (deductibles and out-of-pocket costs). If you want to pay a higher premium to offset the other charges, then that’s right for you. Others can necessarily only pay the cheaper premiums and pay the other charges however they can.
Since Medicare Isn’t Mandatory, How Shall I Opt Out Of It?
You’ll need to visit your local Social Security office. They’ll explain the reasons for you to drop Parts B and D, the penalties for doing so, and how to opt back in at a later date.
You’ll receive a welcome to Medicare package in the mail. As has been mentioned before, you’re automatically in Part A or the hospitalization portion of Medicare and premium-free. If you want to keep Parts B and D, then do nothing and you’re in. If you want to opt out of Parts B and D, then follow the directions for sending back your Medicare card, and you’re out.
What Will Happen If I Don’t Accept Medicare?
The consequences for not accepting Medicare Parts A and B are severe, to wit:
• If you failed to enroll in Part A, then you will pay ten percent of the premium each month for the length of time you could have had Part A but didn’t. As an example, if you opted out of Part A but came back to Medicare two years later, then you would pay ten percent of the premium each month for four years.
• If you failed to enroll in Part B, then you will pay ten percent of the premium each month for the length of time you could have had Part B but didn’t. You will pay for this each month. Period.
• There’s only one circumstance in which you can enroll in Medicare Parts A and B at a later date without consequences: if you worked at the age of 65 and were covered by an employer’s healthcare coverage, you may enroll in Medicare without penalty when you leave the job.
Although Medicare isn’t mandatory, working seniors might postpone receiving Medicare without penalty until they stop working. Seniors to whom the idea doesn’t appeal may opt out of Part B, but they will pay for it later on and in more ways than one.