Why Am I Being Forced into Medicare at Age 65?

Every American Aged 65 or Older is Eligible for Medicare

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Nearly every American that is aged 65 years or older is eligible for Medicare, and almost all of them are eligible for Medicare Part A (hospital insurance) with no premiums.

However, not everyone 65 years or older wants to receive Medicare. Some individuals feel like that are being forced into Medicare at the age of 65 against their own personal wishes. Why is this the case?

Why Am I Being Forced into Medicare at Age 65?

If you or your spouse worked for at least 10 years in a job where Medicare taxes were withheld (including self-employment where you paid your own self-employment taxes), you'll become automatically eligible for Medicare once you turn 65.

Recent immigrants are not eligible for Medicare, but once they've been legal permanent residents for five years and are at least 65, they have the option to purchase Medicare coverage—as opposed to getting Medicare Part A for free—which is the same option available to long-term US residents who, for one reasons or another, don't have a work history that gives them access to premium-free Medicare Part A (although most people get Medicare Part A without any premiums, it costs up to $422/month for people who have to buy it because they have few or no years of work history).

Those who receive Social Security benefits are automatically enrolled in Medicare when they turn 65. There is no way to opt out of Medicare once you are 65 if you receive Social Security. Either you enroll in Medicare Part A, or you forfeit your Social Security benefits. Most individuals are unwilling to forfeit their Social Security benefits, and thus accept the enrollment into Medicare.

Note that you're only required to accept Medicare Part A—which is premium-free if you're receiving Social Security benefits—in order to retain your Social Security benefits. You are allowed to reject Medicare Part B—which has a premium—if you choose to do so, although you could be subject to a late enrollment penalty if you choose to enroll in Part B at a later date.

There is a great deal of speculation as to why the system is set up in this manner, but unfortunately, there is no clear or direct answer. Perhaps this policy was initially instituted to make it easier for seniors to enroll in Medicare once they reached the age of 65, but was never discontinued when private coverage became more commonplace. Private coverage did not used to be as common as it currently is, which would leave many elderly individuals without health care. This presented an issue when they inevitably need health care.

Regardless of why the system is set up in the manner that it is, the rules are the rules, and they are not very likely to change in the near future. 

Termination of Company-Based Coverage at 65

If you're not yet 65 but are retired and receiving retiree health benefits from your former employer, make sure you're aware of the employer's rules regarding Medicare. Some employers don't continue to offer retiree health coverage for former employees once they turn 65, opting instead for retirees to transition to being covered solely by Medicare. Without coverage from your company, you need Medicare to ensure that you are covered for potential issues that come with old age.

Some companies will not cut an individual off completely at the age of 65, but instead continue to offer supplemental retiree benefits, which can be used in conjunction with Medicare (they may require you to enroll in both Medicare Part A and Part B in order to receive full benefits—as secondary coverage—from the retiree health plan). The supplemental retiree health benefits may include prescription drug coverage (which isn't covered by regular Medicare, but can be purchased via Medicare Part D if you don't have access to supplemental employer-sponsored coverage), doctor visits, and other outpatient health care.

Medicare will be your primary coverage if you're covered under a retiree health plan, with the plan offered by your former employer serving as secondary coverage.

If you have individual market coverage, purchased in the exchange or outside the exchange, you'll need to contact the exchange or your insurer to ask them to cancel your coverage when you transition to Medicare. Prior to the ACA, individual market insurers typically wouldn't insure anyone over the age of 64, so plans were automatically terminated when people turned 65. That is no longer the case, so enrollees need to make sure that they actively cancel their individual market coverage when they switch to Medicare.

There's no rule that says you have to drop your individual market plan when you enroll in Medicare, although there's generally no reason to keep the individual market plan after you enroll in Medicare. And if you're receiving a premium subsidy to offset some of the cost of your individual market plan, that would end when you turn 65. 

Sources:

Centers for Medicare and Medicaid Services. Frequently Asked Questions Regarding Medicare and the Marketplace. August 1, 2014.

Medicare.gov. Medicare 2018 Costs at a Glance.

Medicare.gov. Part B Late Enrollment Penalty.

Medicare.gov. Retiree Insurance.

Medicare.gov. Sign Up / Change Plans.