Dear AMAC,

I am growing increasingly frustrated with Medicare and I want to know, can I opt out of it? It seems like it doesn’t pay much, so I don’t see the use in paying a monthly premium for Part B. Please advise.

-Mark (Boise, ID)

Hello Mark,

This is a very common and valid question. Medicare Part A and B are considered optional, so it is possible to opt out by contacting the Social Security Administration. However, you may want to consider the consequences of dropping this coverage, as you may face penalties later down the road and/or lose your Social Security benefit check.

If you are not replacing your Part B with credible coverage, you will start incurring a penalty when you drop it. That penalty will be assessed if you pick up Part B again in the future. If you are liable for the Part B penalty, your monthly premium may go up by 10% for each 12-month period that you do not have Part B. The penalty will continue to rise the longer you go without Part B or credible coverage.

Part A is usually premium-free, and you typically can not drop it unless you pay a premium for Part A. If you do not qualify for premium-free Part A, you may also face a penalty by dropping it. The penalty is a 10% increase in your monthly premium for twice the amount of time you went without Part A coverage. So if you went three years without Part A, you will pay the higher premium for 6 years.

Additionally, if you are receiving Social Security benefits, you cannot opt out of Medicare Part A without opting out of Social Security as well. Many people rely on their Social Security benefits to pay for living expenses. Be sure to weigh out the financial implications of dropping Part A before doing so.

Once you drop Part A and/or B, you may not be able to pick it up right away if you change your mind. You may have to wait until the General Enrollment Period, which runs from January 1^st to March 31^st of each year. The soonest your Part A or B will begin again is July 1^st of that year.

Now, if you have a stand-alone prescription drug plan (Part D), your coverage will terminate if you no longer have neither Medicare Part A nor B. You need at least one or the other to keep your drug coverage. Before terminating Part A or B, consider what your drug costs might be if you had to pay the full retail price for them.

You should know that Original Medicare, Part A and B, were never intended to cover everything. Not having any additional medical coverage leaves you paying a portion of your hospital and medical expenses with no annual limit, among other expenditures.

Fortunately, there are other types of insurance that you can add on or replace your Original Medicare with, which can help offset your costs. It may be worthwhile to speak with one of our licensed Medicare Advisors. We can discuss all your options and find out which path makes sense for you.

Sincerely,

Your Medicare Advisor

If you would like to review specific plan options, our licensed agents here at AMAC would be happy to assist you. They are licensed with top-rated insurers throughout the country.

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