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Medicare guide · 10 min read

Do you have to take Medicare at 65? No — but here's what happens if you don't.

Medicare enrollment is voluntary. You are not legally required to sign up. But the financial consequences of skipping it — especially as a self-employed retiree on individual insurance — are usually severe enough that "skipping" is rarely the right call. Here are the actual rules.

The short answer

Medicare is voluntary. The penalty for skipping it is not.

  • Part A: automatic if you're receiving Social Security at 65. Premium-free for most people. Almost impossible to opt out without disclaiming SS entirely.
  • Part B: voluntary. You can decline it. If you do, the late-enrollment penalty is 10% of the standard premium for every full 12 months you went without — permanent, applies to your premium for the rest of your life.
  • Part D: voluntary. Late penalty is 1% of the national base premium per uncovered month, permanent. Compounds with Part B's penalty.
  • Part C: requires Part A and Part B. Not relevant for skipping.
Critical point: the late penalty doesn't reset. If you skip Part B for 5 years and then enroll, you pay 50% surcharge on the standard premium for the rest of your life — not 5 years, forever. At ~$100/month extra over 20 years post-enrollment, that's $24,000+ in permanent penalties.

The specific case: self-employed at 65 with individual insurance

You're self-employed (sole prop, 1099, single-member LLC, or S-corp owner with no employees). You buy your own health insurance — ACA marketplace, an off-marketplace individual plan, healthshare ministry, or you literally self-pay. You turn 65. What are the rules?

Rule 1: Individual insurance is not creditable for Medicare deferral

The "20-employee" rule that lets some employees defer Part B without penalty doesn't apply to you. Individual market plans (ACA marketplace, short-term, off-marketplace) are NOT considered creditable employer coverage for Medicare purposes. The penalty clock starts at 65 regardless of whether you have other coverage.

Rule 2: Your ACA premium tax credits disappear at 65

If you're on an ACA marketplace plan with Premium Tax Credits (PTC), you become Medicare-eligible the month you turn 65. Once eligible for Medicare Part A (premium-free or otherwise), you're no longer eligible for ACA PTCs. Marketplace plans without subsidies are typically $1,500-$3,000+/month for someone 65 — far more than Medicare's standard $202.90/mo Part B premium plus a Plan G + Part D combination.

Rule 3: Most insurers won't sell individual plans to 65+

Off-marketplace individual health insurance for people 65 and older is rare. Most major insurers don't write new individual policies for Medicare-eligible adults — they assume you'll use Medicare. The few that do (specialty short-term plans, major medical) are typically expensive and have coverage gaps.

Rule 4: Part A is usually free anyway

If you've worked 40+ quarters paying Medicare taxes (10+ years), Part A has no premium. There's almost no financial reason to skip Part A — the only common reason is to keep contributing to an HSA, which requires you to delay enrollment in any Medicare program. That's a specific, narrow case.

Rule 5: Part B is where the real decision is

The standard 2026 Part B premium is $202.90/month — $2,435/year before IRMAA. If you're self-employed with significant net income, you can also deduct that premium above-the-line on Schedule 1 of Form 1040 (see our employer-coverage guide). At a 22% federal marginal rate plus state, the after-tax cost of Part B is closer to $1,800/year — for primary insurance from the federal government with no underwriting.

The math: Part B + Plan G + Part D for a typical self-employed retiree ends up costing $4,000-$5,500/year, with the self-employed premium deduction recovering ~$1,000-$1,500. That's net of taxes, total annual healthcare cost, including catastrophic protection that individual plans don't provide. Almost no individual market option for 65+ comes close.

The late-enrollment penalty math

If you skip Part B and later try to enroll, here's what it costs you for the rest of your life:

Years skippedPenalty %Extra premium / mo20-yr permanent penalty
1 year10%$20.29$4,870
2 years20%$40.58$9,739
3 years30%$60.87$14,609
5 years50%$101.45$24,348
10 years100%$202.90$48,696

Based on 2026 standard Part B premium of $202.90/month. Penalty calculated as % surcharge on standard premium, paid every month for the rest of your life after enrollment. Numbers don't include IRMAA (which compounds the surcharge for higher earners).

When skipping Medicare actually makes sense

Rare but real. If any of these applies, skipping (or partially skipping) can be the right call:

Permanent expat with no plans to return

If you're moving abroad permanently and won't ever come back to the US for healthcare, the Part B premium is wasted (Medicare almost never covers care abroad) and the penalty doesn't apply if you never re-enroll. Keep premium-free Part A for occasional return visits. See our "Should I keep Part B abroad?" guide for the math.

You're contributing to an HSA and can't stop yet

Medicare enrollment (Part A or B) makes you ineligible to contribute to a Health Savings Account. If you're working past 65 with a high-deductible health plan and want to keep maxing the HSA contribution, defer Medicare. Stop HSA contributions 6 months before any Medicare enrollment to avoid retroactive Part A enrollment penalties.

Religious exemption (Old Order Amish, Christian Scientists, etc.)

Members of certain religious sects who are conscientiously opposed to insurance can opt out via Form 4029 (filed with IRS and SSA). Available since 1965 for members of "recognized religious sects" with established conscientious opposition. The list is narrow — it's not a general religious-objection exemption. Once granted, you cannot use Social Security or Medicare benefits for life.

You have substantial liquid wealth and prefer cash-pay everything

Some very wealthy retirees ($5M+ liquid) skip Medicare and pay cash for concierge care, premium hospitals, and out-of-network everything. The math is harder than it looks — one $300,000 cardiac event without coverage is real money even at $5M net worth, and Medicare's catastrophic protection (especially with Plan G) is nearly impossible to replicate. CFPs and CPAs almost always advise against. If you're considering this, get advice from a fee-only fiduciary first.

When skipping is almost certainly wrong

You're staying in the US and have any chance of needing healthcare

Medicare is structurally cheaper than any alternative for 65+ retirees in the US. Individual market plans aren't competitive once you lose ACA tax credits. Skipping is throwing money away.

You're on a healthshare ministry

Healthshare ministries (Christian Healthcare Ministries, Samaritan, Liberty Healthshare) are NOT insurance and don't qualify as creditable coverage for Medicare. The Part B penalty clock keeps ticking. Pre-existing conditions and certain treatments are often excluded. Most healthshare members on Medicare keep Part B as primary and use the healthshare for things Medicare doesn't cover.

You think you can get a private plan later if you change your mind

At 65+, the individual market is largely closed to you. Medigap has its own one-time guaranteed-issue window — miss it and you may face medical underwriting forever. You can't easily reverse this decision.

You assume Medicare is automatic

It's automatic if you're already collecting Social Security. Otherwise you have to actively enroll during your IEP. Lots of self-employed people who delayed SS to 70 (the right move for SS) accidentally also delay Medicare and trigger the late penalty.

Quick decision framework

  1. Are you a US citizen, US-resident, planning to use US healthcare? Enroll in Part A and Part B at 65. Almost no exception.
  2. Are you self-employed with significant net SE income? Enroll AND take the self-employed Medicare premium deduction — recovers $1,000-$1,500/year in taxes on premiums you'd pay anyway.
  3. Are you contributing to an HSA? Defer until you stop HSA contributions. Stop contributions 6 months before any Medicare enrollment.
  4. Are you moving abroad permanently? Possibly drop Part B (keep premium-free Part A). See the expat guide.
  5. Are you a member of a recognized religious sect with conscientious objection to insurance? File Form 4029 — you and the IRS/SSA need to agree.
  6. Anything else? Enroll. The penalty math is unforgiving and the alternatives at 65+ are usually worse than Medicare.
Run the math for your situation

What does Medicare actually cost YOU?

Income, IRMAA bracket, medications — the comparison tool models all of it for your specific situation, including the SE deduction recovery for self-employed retirees.

Compare for $49
Related guides
Sources
· CMS — Voluntary disenrollment from Part B (Form CMS-1763)
· CMS — Part B late enrollment penalty calculation (Code of Federal Regulations 42 CFR § 408.20-22)
· CMS — Part D late enrollment penalty methodology
· IRS — Form 4029 (religious-exemption application from Social Security and Medicare)
· Healthcare.gov — Medicare and Marketplace plans (premium tax credit interaction)
· IRS Schedule 1 (Form 1040) — Self-employed health insurance deduction
· 26 U.S.C. § 1402(g) — Religious-sect exemption statute