Peter contacted my company recently about his situation. He is 68 years old and still working. He signed up for Part A two years ago because his company’s group health plan was terrible. He was probably going to need surgery and the hospital deductible was outrageous (her words to him). He recently changed jobs and the policy of his new employer is much better. He wants to open a health savings account (HSA). So how can he leave Part A?
This is not the first time I have been asked this question. Let’s start with some basics.
- Part A, hospital insurance, is premium free for those who have worked and paid taxes for at least 10 years (40 credits) or have a spouse who has.
- Those who do not have 40 credits you can buy Part A and pay the monthly premiums. People who have earned at least 30 credits pay $278 each month and those under 30 pay $506.
- This part of Medicare covers four services: hospitalization, skilled nursing facility stays, home health care, and hospice care. In Peter’s situation, Part A is the secondary payer for Medicare. He can provide additional coverage and help with costs up to Part A limits.
- Once enrolled, a person is no longer eligible to contribute to an HSA, which is why Peter wants to disenroll from Part A.
look at the law
My answer to his question about dropping out of Part A probably wasn’t something Peter wanted to hear. Unfortunately, there is nothing he can do. According to the Centers for Medicare & Medicaid Services (CMS), “People eligible for premium-free Part A You cannot voluntarily cancel your Part A coverage. This is not allowed by law.” In other words, only those who pay a premium for Part A can disenroll.
When I shared this, Peter pushed back. The human resources director at his company gave him a form to fill out. The form is titled, “Application Part A Premium Termination, Part B or Part B coverage of immunosuppressive drugs”. The instruction note:
- Who can use this form? people with Medicare Part A Premium or B that you want to cancel your hospital coverage or medical insurance.
- Use this form: Yes do you have the part A premium or Part B, but you no longer want to be enrolled.
Peter has premium-free Part A, and by law, he can’t cancel Part A.
There is no requirement to enroll in Part A
Peter isn’t the only one who wants to get out of Part A. I’ve heard from others who signed up because someone told them they had to sign up for Part A at age 65. These are the facts.
- There is no rules or requirements that someone must enroll in Part A.
- Those who receive Social Security benefits will automatically enroll in Medicare at age 65 and receive their Medicare card in the mail. They must keep Part A; it is a condition of receiving benefits. (The decision about Part B, medical insurance, depends on the situation. The Medicare card includes instructions for those “who don’t want Part B.” Caution: You may not want Part B, but you may need it. Take the time to research your circumstances.)
- When applying for Social Security benefits after age 65, the applicant must also sign up for Part A.
- If they are not receiving benefits, a person can postpone Part A until they are ready to retire and drop employer coverage.
Bottom line: The decision to enroll in premium-free Part A cannot be undone at a later date. Evaluate your coverage options and opportunities between age 65 and retirement. If you enroll in Part A, you’ve essentially decided that there will be no future HSA contributions.