Do You Need Medicare Part B?
No, you do not necessarily need to enroll in Medicare Part B as soon as you become eligible. However, delaying coverage may result in a lifelong late enrollment penalty. The longer you wait to enroll in benefits, the larger this penalty will grow.
Part B covers 100% of all eligible preventative services and 80% of most medically necessary procedures and equipment prescribed by a Medicare-participating doctor. While Medicare imposes penalties on most seniors who defer Part B enrollment after they turn 65, it makes exceptions for those who want to continue working and remain on their employer’s group health insurance plan.
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Can You Only Get One Medicare Part?
Yes, depending on your situation, you can elect for only one Medicare coverage. If you do not qualify for premium-free Part A, you can enroll in Part B independently. Similarly, those with premium-free Part A can defer Part B coverage. However, doing so would likely result in future late enrollment penalties. Further, in order to enroll in Part A you must enroll in Part B as well.
How Does Part B Deferment Work?
Your ability to defer Medicare Part B depends on your unique life circumstance and tolerance for potential late enrollment penalties.
When Do You Need to Enroll in Part B?
Most people in the following situations must enroll in Medicare Part B:
- They are 65 years old and want to retire or have already done so.
- Their employer has fewer than 20 employees.
- They have coverage under a spouse’s group health plan, but the overseeing employer requires dependents to enroll in Medicare at age 65.
When Do You Not Need to Enroll in Part B?
Most Medicare-eligible individuals sign up for Medicare Part B during their Initial Enrollment Period (IEP). It begins three months before your 65th birthday, includes the month of your 65th birthday, and continues for three months after your 65th birthday. This gives you a total of seven months to enroll. For example, if your 65th birthday is in July, your IEP would start in April and end in October.
Outside of IEP, you can enroll during a Special Enrollment Period (SEP), allowing those who are eligible for a Special Enrollment Period (SEP), allowing those who have deferred to sign up without consequence. You might receive an SEP by meeting the following criteria:
- You still have a job with employer-sponsored healthcare.
- You have medical coverage under your spouse’s employee group health plan.
- A natural disaster, misleading health insurance information, or a recent incarceration disrupted your ability to secure Medicare on time.
You can use your SEP to enroll in Medicare while still covered by outside insurance. Or, if you suddenly lose benefits, Medicare will grant an 8-month SEP to enroll in Part B before imposing penalties. Depending on the situation, some people who want to continue contributing to HSAs can also defer Part B without immediate consequences.
What Happens If You Do Not Enroll in Part B?
Suppose you miss your IEP and do not qualify for an SEP. You must then wait until the next General Enrollment Period (GEP) between January 1st and March 31st to secure Medicare Part B. This would trigger a late enrollment penalty, potentially leaving you without health insurance through the interim period.
Will You Be Penalized?
In most cases, failing to enroll in Medicare Part B during your IEP will result in a late enrollment penalty. Whenever you finally purchase Part B, this recurring charge will get added to your monthly premium for as long as you sustain coverage or for the rest of your life.
Your initial penalty will start at 10% of the annual Part B premium and increase another 10% percent for every year you fail to secure coverage. For example, if you waited three years to enroll in Part B, you must pay a 30% penalty on top of your monthly premium. In 2023, this would cost you $214.37 per month (your $164.90 Part B premium plus a $49.47 penalty).
Can You Get Medigap Without Part B?
Only seniors with Original Medicare Part A and B can purchase Medigap. If you qualify for automatic Part A enrollment, your one-time Medigap Open Enrollment Period will begin the first day of the month after you enroll in Part B benefits.
Medigap, or Medicare Supplement, plans specifically exist to fill coverage “gaps” not fully reimbursed by Original Medicare. These include patient fees like coinsurance, copayments, and deductibles. Seniors without Medicare Part B must pay for doctors’ services entirely out-of-pocket, eliminating conventional cost-sharing measures and making a Medigap plan irrelevant.
Part A Vs. Part B Deferral
Medicare deferment rules vary depending on the type of coverage you wish to delay. Most seniors who have consistently worked and paid taxes automatically receive premium-free Part A, nullifying any reason for deferral. However, those individuals who must pay for Part A and fail to do so will also trigger a unique late enrollment penalty.
Unlike Part B penalties, Part A late enrollment fees increase your premium by 10% and last twice as long as it took to secure coverage. So, if you waited two years to purchase Part A, you would pay a 10% increased premium for the next four years. In contrast, Part B penalties multiply every year you delay coverage and last for the rest of your life.
Can You Have Part B and Other Insurance?
Yes, eligible seniors can have Medicare Part B with other forms of health insurance, including Medicaid, employer-sponsored group health plans, and retiree coverage. The same rules apply to individuals with Medicare Part A or both. If you have outside insurance in tandem with Original Medicare, each policy – or “payer” – will coordinate benefits to decide who pays for what.
The primary payer, or the insurance company that pays first, will pay up to its coverage limits. The secondary payer will then pay for any remaining eligible costs. Some secondary payers, such as specific group health plans and retiree coverage, will require policyholders over 65 to enroll in Part B before reimbursing any medical expenses.
Coordination of Benefits
Coordination of benefits (COB) allows outside insurance providers and Original Medicare to work together to determine each party’s payment responsibilities. How this hierarchy ultimately works depends on the unique details of the insurance policy coordinating with Medicare. Even if Medicare becomes the secondary payer, it will still cover delinquent claims assigned to the primary payer and seek reimbursement retroactively.
How Much Does the Part B Late Enrollment Penalty Cost?
Part B late enrollment charges depend on how long you wait to secure coverage after qualifying for Original Medicare and the current year’s premium rate. Fees start at 10% of the annual Part B premium, increase by another 10% every 12 months you defer coverage, and last for the rest of your life.
For example, if you deferred Part B enrollment for two years, you would incur a 20% penalty. In 2023, Medicare Part B costs $164.90 per month. A 20% late fee would equal another $32.98 per month for the rest of the year. Your penalties will rise and fall annually, congruent to Medicare premium fluctuations.
Should You Defer Part B?
You should only defer Medicare Part B if you qualify for a Special Enrollment Period or can tolerate a lifelong late enrollment fee. Candidates for SEPs typically include 65-year-olds who still have jobs with a health plan, register as dependents on their spouse’s insurance, and people who missed their IEPs due to misinformation or other exceptional life circumstances such as national disasters, hospitalization, or incarceration.
In other cases, some people may have the resources to tolerate recurring penalties without feeling too much financial strain. Or, considering that fees only apply to active coverage, individuals who genuinely believe they will never require Medicare Part B would not have to worry about any affiliated charges.
- Saving money on premiums
- Allows deferment of enrollment without penalties
- Ability to contribute to HSAs without tax penalties
- Can incur increased penalties if not managed correctly
- Sometimes not possible if Medicare eligible
Deferring Medicare Part B presents the following upsides:
- Saves seniors $164.90 every month on Part B premiums
- Allows members to delay their singular Medigap Open Enrollment period to a more ideal time
- People with qualified health insurance through their employer or their spouse’s employer can defer Part B without incurring penalties
- Once you lose employer coverage, Medicare will grant you a full 8-month SEP to enroll in Part B
- You only have to pay late enrollment fees while you actively sustain Part B coverage
- Allows you to continue contributing to HSAs without tax penalties
- Some people may qualify for cheaper subsidized coverage on the ACA marketplace, making Medicare unnecessary
However, most people will experience some or all of the following consequences by deferring Part B:
- Seniors without eligible employer-sponsored insurance who miss their IEP will immediately incur a Part B late enrollment penalty
- Penalties increase by an additional 10% every year you defer coverage
- Late enrollment penalties get added onto your Part B premium for the rest of your life
- Some group health plans will not cover a spouse’s dependents after they become eligible for Medicare
- Seniors who work for companies with less than 20 employees will not qualify for an SEP
- You will only have one chance every year to secure coverage during the Medicare GEP, exposing you to potentially costly coverage gaps
Putting It All Together
While most Americans automatically qualify for premium-free Part A when they turn 65, they must purchase Part B separately to access all the benefits available through Original Medicare. While you do not need Medicare Part B, deferring registration beyond your IEP could result in a recurring late enrollment penalty due whenever you finally secure coverage.
While deferment could prove costly for many, waiting to purchase Medicare Part B occasionally presents unique advantages, especially for seniors who want to keep working or qualify for a Special Enrollment Period. If you have general questions about Original Medicare or wish to clarify your SEP eligibility, call 1-800-772-1213 or visit your local Social Security office for more information.