Can You Decline Medicare if You Take Social Security?
The US Court of Appeals for the District of Columbia Circuit recently said no. A group of seniors, including former US House Majority Leader Dick Armey, had sued the federal government to be allowed to accept Social Security payments, but decline Medicare coverage. They preferred to keep their private coverage to being covered by Medicare. Unfortunately for them, the court concluded that the Social Security Act did not allow an individual to take Social Security payments without also accepting Medicare Part A coverage (although the individuals could not be forced to use the benefits). Eligible individuals can at times accept Medicare coverage without starting their Social Security benefits; the restriction runs in only one direction.
While this may seem like an issue that has nothing to do with employee plans, in fact I have had the issue arise in my practice. Under the Health Savings Account (HSA) rules, an individual actually covered by Medicare is not eligible to fund an HSA. If an employer offers a high deductible health plan (HDHP) that can be paired with an HSA as its health coverage for employees, an employee who has chosen to begin receiving Social Security benefits will not be able to fund an HSA, either through employer or employee contributions. The employee cannot simply decline Medicare in favor of the HDHP and HSA coverage. The employee would also have to decline the Social Security payments.
Employers with older workers and HDHP/HSA programs should make sure that their communications are accurate. An employer that helps fund an HSA could consider making different coverage available to employees not eligible for HSA funding.
Contact Benefits Notes for more information.