So long as you have creditable coverage elsewhere, you can disenroll from Medicare Part B without incurring late penalties.
Although Medicare offers very good coverage for most enrollees, there are various reasons why you may want to cancel your coverage. Whether you’ve found some other insurance that you think works better for you or have some other personal reason why you’d rather not keep your enrollment in Medicare, we’ll run through your options for canceling your coverage.
How Does Part B Enrollment Work?
If you already know that you don’t want Part B coverage, it can be easier to defer your enrollment from the very beginning. In order to understand whether or not this is a good option for you, let’s take a look at how Part B enrollment works.
Most people will automatically enroll in Part B on the month of their 65th birthday. You should expect to receive some materials related to Medicare in the mail a few months before your birthday month. These seven months (three months before your birthday month, that month itself, and three months after, are together known as your Initial Enrollment Period).
If you are receiving Social Security or Railroad Retirement Board benefits during this time, your enrollment will be automatic and payment will automatically come out of your benefit payments each month. Otherwise, you will have to set up a payment method with Medicare.
Deferring Enrollment Before It Starts
If you want to defer your enrollment, you will have to contact the Social Security Administration to make sure that you aren’t enrolled in Medicare. This should be a straightforward process, but make sure that you do it as soon as you can, so you don’t pay any premiums and then have to cancel later.
Late Enrollment Penalty for Part B
If you are planning on deferring your coverage, it’s also important to understand the late penalties you may face. Medicare Part B has a distinct late penalty from Medicare Part A hospital insurance.
The Part B late penalty is especially important to understand because it will stay with you the entire time that you have Medicare. The way the penalty works is that you pay a 10 percent increase for every 12-month period that you could have had Medicare coverage, but didn’t. And, this increase will stay with you forever.
If you didn’t enroll in Medicare for 2 years after your Initial Enrollment Period, for example, then you could face a 20 percent increase in your monthly premiums for the rest of the time that you have Part B. This can add up to a huge amount of money paid in Part B premiums over the years.
There won't be a change to your deductible or coinsurance fees.
There are a few situations in which you can delay your enrollment and not face late penalties. This includes things like already being covered by your employer.
Why You May Want to Cancel Part B
There are a variety of reasons that you may want to cancel your Medicare Part B coverage. Some of these reasons are better than others, and we’ll just take a look at two of the most common below.
You Already Have Health Insurance from Your Current Employment
If you already have employer coverage and have enrolled in Part B, then Part B will function as your secondary insurance. In this case, if you cancel Part B, you may face late penalties when you re-enroll, depending on the timing.
Usually, when you lose employer-based coverage, you trigger a Special Enrollment Period during which you can enroll in Medicare without facing additional late penalties.
You Found Private Medical Insurance That You Prefer
For most seniors, Medicare will be the best insurance plan out there. However, some individuals have specific needs that aren’t covered as thoroughly by Medicare as by private insurance companies. An example of this includes long-term care for dementia and Alzheimer’s patients, which isn’t usually covered by Medicare.
To remedy this, most people can find a suitable Medicare Advantage plan that fits their needs. However, if you can’t find such a plan, it may end up being worthwhile to disenroll in Medicare and enroll in a private health plan that better suits your needs.
In this situation, make sure that you analyze how much your new plan will cost in detail. Although some plans can seem cheaper, this isn’t always the case. In this way, finding a private plan will usually be more complex than keeping Medicare. However, it will be the best path forward for some.
How to Disenroll in Medicare Part B
Canceling your Part B coverage will usually be referred to as “disenrolling” in Medicare. Doing this can take some time, but is a fairly simple process.
If you decide that you want to disenroll in Part B, you will have to do two things. First, you will need to fill out a form known as Form CMS-1763. You can get a Social Security representative to help you with this in person at a local Social Security office, or over the phone. The number to reach the Social Security Administration is 1-800-772-1213 (TTY: 1-800-325-0778), and you can find more information at ssa.gov.
Second, you will have to schedule a private interview with a Social Security representative. The reasoning behind this step is that disenrolling in Medicare Part B is a serious decision that can come with some drawbacks, so they want to make sure that you understand what you’re getting yourself into beforehand. If you still want to disenroll after the private interview, you will be able to do so immediately.
How Can I Enroll Again?
If you disenroll in Medicare, that doesn’t mean you won’t need Medicare coverage later on. Enrolling in Medicare again can come in a few forms.
Special Enrollment Periods
If you had a serious life change, such as moving to a new state, having a child, or losing your employer-based coverage, you may have triggered a Special Enrollment Period. This is a period during which you can enroll in Medicare with no additional penalties, even though it is outside of the usual enrollment periods.
The length of Special Enrollment Periods will vary, so make sure you understand the details of yours as far in advance as possible.
Medicare Open Enrollment
Medicare Open Enrollment lasts from October 15th to December 7th of each year. During this period, you can change your plan or enroll in Medicare if you didn’t enroll during your Initial Enrollment Period. You can also switch from Original Medicare to Medicare Advantage, and vice versa, or enroll in a Medicare Part D plan for prescription drug coverage. Your coverage will begin on January 1st of the following year.
It’s important to keep the Open Enrollment Period in mind because it may involve a coverage gap. Even if you lose your non-Medicare coverage and then immediately enroll in Medicare, your coverage will only begin in January unless you qualify for a Special Enrollment Period.
Key Things to Remember About Cancelling Part B
If you have decided that canceling your Part B coverage is best for you, then canceling should be a breeze. Although we advise you to look at your options in detail, disenrolling will simply be the best option for some people.
The most important things to remember before you start the process are to remember that the process will take time, so you should start early. And, remember to be mindful of enrollment periods, late penalties, and possible gaps in healthcare coverage that you may face as a result of your disenrolling.
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