Can You Choose Private Health Insurance Over Medicare?

Posted: September 27, 2023

Many individuals who reach the age of retirement wonder if they can choose private health insurance over federally funded Medicare. Explore how private health insurance works and whether you can have Medicare and other forms of coverage simultaneously. If you still want to work after age 65, consider whether you can enroll late in Medicare and the penalties for late enrollment.

How Does Private Health Insurance Work?

Private health insurance is often provided to individuals through their employer or federally approved providers from the Marketplace. Some private companies are Medicare-approved, meaning you can find coverage through a private institution with many of the benefits that Medicare provides.

A Medicare-approved private insurance company offers assistance with Medicare costs, including coinsurance, copayments and deductibles. It covers parts of prescription drugs and benefits like dental, vision and hearing care.

How Does Medicare Work?

Medicare offers health insurance to eligible individuals over the age of 65. Those who sign up often receive free services or pay low monthly premiums and present a Medicare card to their provider when visiting the doctor. Medicare assists retired individuals through affordable health care, medication and doctor’s visits.

The Cost and Benefits of Private Health Insurance

Your monthly private health insurance premium may vary depending on the coverage type, location and age. Most private health coverage pays for hospital care and outpatient services like diagnostic tests and physical therapy. It also pays for part of prescription drug costs.

The Cost and Benefits of Medicare

Medicare covers the cost of general, hospital and outpatient services like diagnostic tests, doctor’s visits and physical therapy. Remember that Medicare might not cover specific prescriptions and medications unless you sign up for Medicare Part D. Medicare is usually free for most individuals unless you sign up for an additional part of the program like Medicare Parts B, C and D.

FAQ: Private Insurance vs. Medicare

Now that you understand the costs and benefits of both Medicare and private insurance, you might still wonder if you can opt out of Medicare or what the penalties are for late Medicare enrollment. Here are a few common questions when considering Medicare or private insurance coverage.

Can You Have Medicare and Private Insurance at the Same Time?

In short, yes. You can have Medicare and private insurance at the same time. If you have both, Medicare will establish who the primary and secondary payers are. The primary payer will pay for costs first, while the secondary payer will cover any remaining costs.

Medicare might pay first if you have insurance through an employer with less than 20 employees. The employer insurance might pay first if they have over 20 workers and you are 65 or older.

Can You Opt Out of Medicare if You Have Private Insurance?

The short answer is yes. However, opting out of Medicare might come with various challenges, costs or penalties. Medicare contains several different programs within its health care system. Each type — including A, B, C and D — comes with various regulations for signing up and penalties and costs for late enrollment.

Some individuals choose to work well past retirement age or age 65. If you have private insurance through an employer, you might consider signing up for Medicare at a later date or after your employer coverage ends. This usually comes with no penalty. However, if you choose to opt out of Medicare completely, it can be challenging and costly.

For example, declining Medicare requires you to withdraw from Social Security benefits. You might also have to pay back any benefits and payments already received. So, while you might already have private insurance, it can be a good idea to enroll in Medicare regardless. In most cases, it saves you penalties and high costs and can provide more benefits and coverage for your medical expenses.

Can You Have Private Insurance and Medicaid?

Medicaid is a type of health insurance program funded by the government. Medicaid offers health care to low-income individuals, older adults, pregnant women, those with qualifying disabilities and those with children. In comparison, private health insurance is a type of coverage offered by private companies and is not funded by the government.

So, can you have both private insurance and Medicaid? Yes. As long as you meet your state’s requirements for annual income or qualify for a disability. Many individuals find that having private insurance and Medicaid can help them cover more medical costs and save money.

However, you should be aware of the downsides. Medicaid often acts as supplemental coverage — or wrap-around coverage — after your other health insurance has paid for covered expenses. Medicaid will cover the costs left after your private insurance coverage.

Can You Choose Not to Use Medicare?

Yes. You can choose not to use Medicare. It is better to sign up even if you decide not to use the benefits. Signing up for Part A of Medicare does not cost anything if you choose not to use it.

As mentioned, declining Medicare might come with complicated late enrollment penalties or consequences. While Medicare is not mandatory, and some parts are optional regardless — such as Medicare Part C and D — declining Parts A and B comes with consequences.

According to the Social Security Administration, it is highly recommended that eligible individuals sign up for Medicare to avoid penalties. While you might not plan to retire anytime soon or even use Medicare benefits, it is better to sign up rather than decline. You can sign up late for Medicare without penalty if you have employer-based coverage.

Declining Medicare Part A and B means you will have to withdraw from Social Security and Railroad Retirement Board (RRB) benefits. You may also have to repay any benefits already received.

Do You Have to Sign up for Medicare if You Have Private Insurance?

If you have private insurance or coverage through an employer, you can choose not to sign up for Medicare without incurring any penalties. Double-check Medicare rules and regulations, as delaying enrollment is usually allowed, but after a specific time might result in costs or fines. So, in the long run, it is better to sign up even if you have private insurance.

Explore Medicare or Private Health Insurance With Health for California

Health for California is a health insurance agency that has been operating in California since 2004. The California Department of Insurance has licensed our agents with the knowledge and professional education to help you make the right insurance decisions. We can help you find the best coverage for your needs by offering a simple, easy quote with various plan options.

Health for California representatives can introduce you to the application and enrollment process while calculating government subsidies or cost-sharing qualifications. Contact us today to explore health insurance or request a free quote online.