Monday, April 02, 2012

Medicare Opt Out

Medicare options at age 65. Automatic enrollment in Medicare? Yes, and no. You have Medicare options but you may not want to exercise them.

The folks at Consumer Reports offer this Q&A on Medicare options.

Q. I’m a candidate for high national office who just turned 65. I’m not signing up for Medicare because of my political convictions. Is there any downside to this?

A. OK, I made up this question, but it’s true that, according to several news sources, Republican presidential candidate Mitt Romney, who turned 65 on March 12, is not enrolling in Medicare but rather continuing to be covered under his current private insurance plan.

Is there, in fact, any downside to not enrolling in Medicare when you turn 65?

Yes, several.

1. You will be penalized later if you change your mind. Your Medicare Part B premium will be 10 percent higher, for life, for every year you could have been in Medicare, but were not. Similarly, your Part D drug plan premium will be 1 percent higher for every month you could have had a plan, but did not. With a reported income in 2011 of nearly $21 million, Romney may not care, but you probably will. (The rules are different for people who have group health insurance through their own or a spouse’s active employment at a job. Here are details if this is your situation. )

2. You may have to give up your Social Security benefits. This startling possibility arose last month when the U.S. Court of Appeals for the District of Columbia Circuit affirmed a lower court ruling that said if you want to get a monthly check from Social Security, you must be enrolled in Medicare Part A. Or, to put it another way, if you want to turn down Medicare, you’ll have to turn down Social Security as well.

3. Your existing individual policy is likely more expensive than, and not as good as, Medicare. Surprisingly, if you have an individual health plan (as opposed to a group plan through your job or a spouse’s job), you can keep it once you turn 65. But it will cost you, especially considering that Part A, the part of Medicare that covers hospital care, is free for anyone who qualifies for Social Security retirement benefits. “Generally what you pay for Part B, Part D, and Medigap is going to be the same or less than what you’re paying for individual coverage, and the benefit package might be better, because a lot of individual plans today have very high deductibles,” says Bonnie Burns, a Medicare expert with California Health Advocates, a nonprofit advocacy group. Also, on Medicare you can see any participating provider, whereas almost all private individual policies restrict you to some type of provider network.

4. You may find it hard or impossible to purchase new individual coverage. Individual coverage becomes increasingly hard to find the older you get, mainly because older adults are more apt to have pre-existing conditions. Moreover, because the overwhelming majority of Americans take Medicare at age 65, “there really isn’t a robust private individual market for individuals that age,” says Mila Kofman, an insurance expert at theGeorgetown University Health Policy Institute.

For instance, Ann Romney, the candidate’s wife, has multiple sclerosis, a serious pre-existing condition that in most states would disqualify her completely from purchasing private insurance. But the Romneys live in Massachusetts, where—thanks to a health reform law that Romney himself signed when he was governor—insurers are not allowed to turn down customers or charge them sky-high rates based on their health histories. A couple with their birth dates, living in their Belmont zip code, can buy a generous comprehensive plan for around $1,500 a month.

Well, not everyone has Romney's wealth, nor do the live in Massachusetts.

Even if you do live in Mass., you will need a big pot of money to buy health insurance. Thanks to RomneyCare, citizens of Massachusetts pay some of the highest health insurance premiums in the country.

And yes, you can expect the same if Obamacare is not overturned by SCOTUS, or repealed following the 2012 election.

Exploring your Medicare options, including enrolling in Medicare at a later date, may not be in your best interest.

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