When should you decline Medicare?
💡 When to Delay or Decline Medicare
You should decline or delay Medicare Part B (and premium Part A if applicable) only when you have active, qualifying group health coverage through a current employer (or a spouse's current employer) with 20 or more employees.
✅ Common Scenarios for Delaying or Declining
- Active Employment: You or your spouse are still actively working and covered by a large employer group health plan (20+ employees).
- Health Savings Account (HSA): You want to continue contributing pre-tax dollars to an HSA, which stops the moment you enroll in any part of Medicare.
- Active Military Coverage: You are covered by active-duty military health benefits (TRICARE).
⚠️ Critical Risks and Rules to Watch
- Company Size Rule: Employers with fewer than 20 employees require you to take Medicare at 65; small plans pay secondary, leaving huge gaps if you decline.
- Retiree or COBRA Plans: These do not count as active employment coverage; delaying Medicare past 65 while on COBRA triggers lifetime penalties.
- VA Benefits: Veterans Affairs coverage is not considered creditable group health coverage for Part B waiver; dropping Part B risks late fees.
- Lifetime Penalties: Missing your window without valid coverage adds a permanent 10% lifetime penalty to Part B for every year delayed.
📊 Action Steps by Situation
| Situation | Action to Take | Penalty Risk |
|---|---|---|
| Working (20+ employees) | Delay Part B; decline auto-enrollment card if received. | None if creditable |
| Working (<20 employees) | Enroll in Medicare Part A & B immediately at 65. | High if delayed |
| Retiree / COBRA | Enroll during Initial Enrollment Period. | Lifetime penalty |
📌 How to Process a Declination
- Not on Social Security: Do nothing during the Initial Enrollment Period; sign up later using Form CMS-L564 from your employer.
- Auto-Enrolled via Social Security: Follow the instructions on the back of your red, white, and blue Medicare card to decline Part B before coverage starts.