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How to Opt out of Medicare Part B

Copyright © 2014 AARP. All rights reserved.

You need to think twice about saying no to Medicare Part B coverage, even though it costs a monthly premium to use it. (If that amount would be a hardship, you may be able to have the premiums paid by your state.) It’s an important decision you need to make during the enrollment process — especially if you’re signed up automatically — and you should be very clear on how to deal with it according to your situation.

There are situations when opting out of Part B is okay — in other words, not likely to cause you any regrets (or cost you money!) in the future — and when doing so may cost you money or cause other problems.

Bizarrely, the rules are different for people who have Medicare because they’re 65 or older and those who have it at earlier ages on the basis of disability. So look separately at these two groups to know when people in each can confidently turn down Part B.

Know when to turn down Part B if you’re 65 or older

In general, when you’re 65 or older, you should decline Part B only if you have group health insurance from an employer for whom you or your spouse is still actively working and that insurance is primary to Medicare (it pays before Medicare does).

In this situation, you can delay Part B enrollment without penalty until the employment stops or the insurance ends. So if you’re not yet drawing Social Security (or railroad) retirement benefits, just skip signing up for Part B.

Or, if you’re enrolled automatically because you’re receiving those benefits, you can decline Part B by following the instructions that Social Security sends you in the letter that accompanies your Medicare card and meeting the specified deadline.

Opting out ensures that you don’t have to pay Part B premiums or, if you’re receiving retirement benefits, have them deducted each month from your Social Security or railroad retirement check. But of course, if you prefer to pay for both employer insurance and Medicare coverage — and that’s entirely your choice — go ahead and enroll (or stay enrolled) in Part B.

One group of people is especially prone to turn down Part B without giving it adequate thought: people age 65 and older who are in same-sex marriages or domestic arrangements with people of the same or the opposite sex and who are covered under health insurance from their partner’s employer. If you’re in either of these situations, you need to find out exactly how current law applies to you.

When to turn down Part B if you’re under 65

In general, if you have Medicare based on disability, you should decline Part B only if

  • You have health insurance from an employer for whom you or your spouse actively works, and the employer has 100 or more employees.

  • You’re covered as a family member on somebody else’s group health plan at work, and the employer has 100 or more employees.

What does family member mean? It means that the employer providing this insurance regards you as eligible for health coverage based on your domestic relationship with an employee — even if you aren’t formally married to that person and even if he or she is the same sex as you.

When turning down Part B at any age is risky

Regardless of whether you have Medicare based on disability or age, you should definitely enroll in Part B (or not refuse it) if you have health insurance that will automatically become secondary to Medicare (it will pay after Medicare does) when your Medicare benefits begin. This includes the following:

  • Health insurance that you buy yourself on the open insurance market and that isn’t provided by an employer

  • Health insurance from an employer with fewer than 20 employees (if you’re 65 or older)

  • Health insurance from an employer with fewer than 100 employees (if you have Medicare due to disability)

  • Retiree benefits from a former employer (your own or your spouse’s)

  • Health benefits from the military’s TRICARE For Life retiree program

You should enroll in Part B coverage in the preceding situations for a very good reason quite apart from the possibilities of late penalties down the road if you don’t. When Medicare is considered primary coverage, it pays your medical bills first.

So if you’re not enrolled in Part B, you run the real risk of having your insurance plan deny any claims that Medicare could’ve paid — from basic ones like doctors’ visits and lab tests to major ones like surgery. In other words, you may face having to pay the entire bill.

Worse, if your own insurer takes a while to realize that you haven’t enrolled in Part B, your plan may even ask you to pay back all the money it has spent on your medical services since you became eligible for Medicare.

This kind of thing doesn’t always happen. For example, if you’re a federal retiree and receiving health insurance from a plan in the Federal Employee Health Benefits Program, you aren’t required to enroll in Part B.

When deciding whether to accept or decline Part B, finding out whether Medicare would be primary or secondary to any other insurance that you have is critically important.

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