Can You Defer Medicare?

As you approach retirement age, you may be wondering if there are any options to defer Medicare. This is a common question for those who plan on continuing to work past the age of 65, or for those who have other forms of health insurance coverage.

The short answer is no, you cannot defer Medicare. However, there are some exceptions and nuances to this rule that may apply to your specific situation. In this article, we will explore the ins and outs of Medicare deferral so you can make an informed decision about your healthcare options in retirement.

Can You Defer Medicare?

Medicare is a federal health insurance program that provides coverage for people aged 65 and older, as well as for people with certain disabilities and medical conditions. But what happens if you don’t want to enroll in Medicare right away? Can you defer your coverage? In this article, we’ll explore the answer to that question.

Understanding Medicare Enrollment

When you become eligible for Medicare, you have a seven-month window to enroll in the program. This period is known as the Initial Enrollment Period (IEP). Your IEP begins three months before the month you turn 65 and ends three months after the month you turn 65. If you don’t enroll in Medicare during your IEP, you may face penalties and gaps in coverage.

Reasons to Defer Medicare

While most people enroll in Medicare during their IEP, there are some situations where you may want to defer your coverage. For example:

• You have coverage through an employer-sponsored health plan and plan to continue working after age 65
• You have coverage through your spouse’s employer-sponsored health plan
• You’re still covered under the Affordable Care Act and don’t want to lose your ACA coverage

Consequences of Deferring Medicare

While there are some valid reasons to defer Medicare, there are also consequences to consider. If you don’t enroll in Medicare during your IEP, you may face penalties and gaps in coverage. Here’s what you need to know:

• If you don’t have creditable coverage (coverage that’s at least as good as Medicare) and don’t enroll in Medicare during your IEP, you may face a late enrollment penalty. The penalty is 10% of the Part B premium for every 12-month period you were eligible but didn’t enroll.
• If you wait too long to enroll in Medicare, you may face gaps in coverage. For example, if you don’t enroll in Part B during your IEP, you may have to wait until the next General Enrollment Period (January 1 to March 31) to enroll, and your coverage won’t begin until July 1 of that year. This means you’ll be without coverage for several months.

How to Defer Medicare

If you decide to defer Medicare, you can do so by simply not enrolling during your IEP. However, you’ll need to make sure you have creditable coverage to avoid the late enrollment penalty.

Creditable Coverage

Creditable coverage is health insurance coverage that’s at least as good as Medicare. If you have creditable coverage through an employer-sponsored health plan, you can defer Medicare without facing a penalty. Your employer will provide you with a notice each year that tells you whether your coverage is creditable.

Special Enrollment Periods

If you do decide to defer Medicare and lose your creditable coverage, you’ll have a Special Enrollment Period (SEP) to enroll in Medicare without facing a penalty. Your SEP begins the month after your creditable coverage ends and lasts for eight months.

The Bottom Line

While there are some valid reasons to defer Medicare, it’s important to understand the consequences of doing so. If you don’t have creditable coverage and don’t enroll in Medicare during your IEP, you may face penalties and gaps in coverage. If you’re unsure whether you should defer Medicare, it’s a good idea to talk to a Medicare expert who can help you make an informed decision.

Frequently Asked Questions

Can You Defer Medicare?

Yes, you can defer Medicare. However, deferring Medicare may result in late enrollment penalties and gaps in coverage. If you have health insurance through an employer or union, you may be able to delay Medicare enrollment without penalty. In this case, you can enroll in Medicare during a Special Enrollment Period after your employer or union coverage ends.

It’s important to note that delaying Medicare enrollment could also affect your eligibility for certain programs, such as Medigap and Medicare Advantage plans. These plans may have restrictions on enrollment if you delay signing up for Medicare. It’s recommended that you speak with a Medicare representative or a licensed insurance agent to fully understand the implications of deferring Medicare.

What is the Penalty for Deferring Medicare?

The penalty for deferring Medicare is a late enrollment penalty. If you delay enrollment in Medicare Part A, Part B, or both, you may have to pay a higher premium for as long as you have Medicare. The penalty amount is calculated by multiplying 1% of the average national premium by the number of full, uncovered months you were eligible for Medicare but did not enroll.

For example, if you defer enrollment in Medicare Part B for 12 months and the average national premium is $144.60, your penalty would be $17.35 per month. This penalty would be added to your monthly Part B premium for as long as you have Medicare. It’s important to note that the penalty for deferring Medicare can add up over time and become a significant cost.

What are the Benefits of Deferring Medicare?

The benefits of deferring Medicare depend on your individual circumstances. If you have health insurance through an employer or union, you may be able to delay Medicare enrollment without penalty. This can allow you to continue receiving the same level of coverage without having to pay for Medicare.

Deferring Medicare can also be beneficial if you are still working and have access to employer-sponsored health insurance. In this case, you may not need Medicare right away and can delay enrollment until you retire or lose your employer coverage. This can help you save money on premiums and avoid late enrollment penalties.

Can You Enroll in Medicare After Deferral?

Yes, you can enroll in Medicare after deferral. If you deferred Medicare because you had health insurance through an employer or union, you can enroll in Medicare during a Special Enrollment Period after your employer or union coverage ends. In this case, you can enroll in Medicare Part A and/or Part B without penalty.

If you deferred Medicare for other reasons, such as not needing it or wanting to save money on premiums, you can still enroll in Medicare during the General Enrollment Period. However, you may be subject to late enrollment penalties if you enroll after your Initial Enrollment Period has ended.

What Happens if You Don’t Defer Medicare?

If you don’t defer Medicare and you are eligible for Medicare, you will be automatically enrolled in Part A and Part B during your Initial Enrollment Period. If you don’t want Part B or Part A, you must opt out of coverage.

If you miss your Initial Enrollment Period, you may have to pay late enrollment penalties for as long as you have Medicare. Additionally, if you don’t enroll in Medicare when you are first eligible and don’t have other health insurance coverage, you may have gaps in coverage that could result in high out-of-pocket costs. It’s important to understand your Medicare enrollment options and deadlines to avoid penalties and gaps in coverage.

How to Delay Medicare Without Penalties [& Stay On Your Employer Plan]

In conclusion, while it is theoretically possible to defer Medicare, there are several factors to consider before making that decision. It is important to weigh the potential benefits of waiting to enroll against the potential risks and costs, such as late enrollment penalties and limited coverage options. Additionally, it is important to understand that deferring Medicare may not be an option for everyone, as eligibility requirements and enrollment periods vary depending on individual circumstances.

Ultimately, the decision to defer Medicare should be made after careful consideration and consultation with a qualified healthcare professional. By taking the time to assess your individual needs and circumstances, you can make an informed decision that best serves your long-term health and financial goals. Whether you choose to enroll in Medicare immediately or defer your coverage, it is important to stay informed about your options and make choices that align with your personal priorities and values.