Pros and Cons of Delaying Medicare Part B Enrollment
This article was updated on: 09/16/2018
Medicare-eligible individuals should be aware of both the potential penalties and lower savings from delaying enrollment in Medicare Part B (medical insurance).
Many individuals qualify for premium-free Medicare Part A (hospital insurance), provided that they have worked at least 10 years (or 40 quarters) and paid Medicare taxes during those time periods. For these individuals, it typically makes sense to keep Part A, since the coverage comes at no added cost. However, because Part B comes with a monthly premium, some people may choose to delay enrollment in Part B if they already have other coverage. For example, you may wait to enroll in Medicare Part B if you have group coverage through your employer or you’re an active-duty service member with TRICARE coverage.
Ultimately, the choice to enroll in or delay Part B will depend on your specific situation, including your health needs, costs, and other coverage you may have. Here are some pros and cons of delaying Medicare Part B enrollment.
Pros of delaying Medicare Part B enrollment
If you already have other coverage, the biggest advantage of delaying Part B enrollment is not paying an additional premium for benefits you may not need or use. If you or your spouse are working and have medical coverage through an employer or union group plan, you may decide that you don’t need the extra coverage. There is no penalty for delaying enrollment in Medicare Part B if you or your spouse have other coverage based on current employment. You can sign up for Part B later through a Special Enrollment Period (SEP) anytime that you are still covered by the group plan or in the eight months after your employment or the group coverage ends. A Special Enrollment Period occurs anytime you have a qualifying situation and lets you enroll in Medicare Part A and/or Part B outside of the annual enrollment periods.
If you are an active-duty service member (or the spouse or dependent child of an active-duty member), you may delay Part B enrollment and keep your TRICARE coverage. You can sign up for Part B during an SEP without paying a late penalty.
If you are a Medicare-eligible individual living overseas, you will need to consider the pros and cons of delaying Medicare Part B enrollment, especially when Medicare coverage outside of the U.S. is very limited. In general, you won’t be covered by Medicare if you live or travel outside of the U.S. and won’t be able to use Part B benefits even if you are enrolled. On the other hand, if you ever return to the U.S. and enroll in Part B, you could face a hefty penalty for not signing up when you were first eligible (for more information on the Part B penalty, see the below section). For those who only spend part of the year living overseas, or those who foresee eventually moving back to the U.S., it may be safer to enroll in Part B when first eligible to avoid paying a large penalty later.
Cons of delaying Medicare Part B enrollment
Going without Medicare Part B and not having other coverage might leave you paying high out-of-pocket costs for doctors’ visits, preventive care, and medical services. Health care needs tend to increase as people get older, and any potential savings from delaying enrollment in Part B could be offset if you get sick and don’t have medical coverage. If you wait to enroll and then contract an illness, you may not be able to sign up for Medicare Part B until the next General Enrollment Period. In the meantime, you may have to pay for all medical costs out-of-pocket.
Those who do not sign up for Medicare Part B when they’re first eligible and don’t qualify for a Special Enrollment Period may be subject to a late enrollment penalty. This could mean paying a 10% higher monthly premium for every 12-month period that you were eligible for Part B but didn’t enroll. You will have to pay this higher Part B premium for as long as you have Medicare.
When calculating your late enrollment penalty, you’re considered “first eligible” for Medicare Part B during your Initial Enrollment Period (IEP), which typically occurs three months before your 65th birthday, includes the month you turn 65, and ends three months later. If you qualify for Medicare because you get disability benefits from Social Security or the Railroad Retirement Board, your IEP takes place three months before your 25th month of receiving disability benefits. Your Initial Enrollment Period works differently if you qualify because of amyotrophic lateral sclerosis or end-stage renal disease; visit Medicare.gov for more information.
You won’t owe a late enrollment penalty if you qualify for a Special Enrollment Period, which allows you to enroll in Medicare Part B after your IEP has passed, outside of regular enrollment periods. You can delay Medicare Part B and enroll through an SEP if you have health coverage based on current employment (either through your employer or your spouse’s employer).
However, it is important to note that not all coverage qualifies you for a Special Enrollment Period. The following types of coverage do not count as creditable coverage based on current employment and would not exempt you from paying the Part B penalty if you delay enrollment:
- Retiree benefits
- TRICARE (unless you, your spouse, or dependent child are an active-duty member)*
- Veterans’ benefits
*If you are Medicare-eligible, you must be enrolled in Part B to continue receiving TRICARE benefits.
Even if you’re currently covered under an employer plan, you may decide that you want additional benefits through Part B, depending on how comprehensive your coverage is and how much your employer contributes to the cost of your plan. You may want to talk to your employer’s health benefits administrator or an eHealth licensed insurance agent to see how Medicare would work with your current coverage and what the pros and cons of delaying Medicare Part B enrollment might be for you.
If you’re qualified for Original Medicare, Part A and Part B, then you also have several Medicare plan options available. You may wish to add a stand-alone Medicare prescription drug plan to your Part A and Part B coverage, or maybe you’d like to join a private Medicare Advantage plan to have all your Medicare benefits handled under one policy.
I’d be happy to review these options with you. Learn more about me by clicking on the “View profile” link below. You can use the other links to schedule a phone appointment or have me email you personalized information about plans. To take a look at available Medicare plans right now, use the Compare Plans buttons on this page.