Unemployed Because of the Coronavirus? Can You Enroll in Medicare “Temporarily?”
Many Americans are in dire situations. Because of the coronavirus, businesses are shutting their doors and furloughing workers. Federal Reserve analysts predict the coronavirus outbreak could lead to the loss of 47 million jobs next quarter, with an unemployment rate of 32%.
One of the biggest concerns for these workers is losing their health insurance. Some companies say they’ll continue coverage for a few weeks or months. But, it’s likely many of those who are laid off won’t have coverage so they are seeking options. For those over 65, Medicare may top that list.
The big question: If I enroll in Medicare during this national crisis, can I un-enroll when I go back to work and resume the employer coverage? Yes, that’s possible... BUT you must know about some important complications.
Part A Dangers
If you are not currently enrolled in Medicare Part A, hospital insurance, enrolling now may jeopardize any recent Health Saving Account (HSA) contributions. Social Security can back date your Medicare enrollment up to six months making any recent contributions subject to withdrawal and a 6% penalty.
If you'd like to return to work and potentially drop Part A later, talk with Social Security about your ability to this part of Medicare. You may not be able to. And, if you are able to do that, you would likely have to repay any Social Security or Part A health benefits you received. Because of this, strongly consider continuing with Part A after returning work. But, again, keep in mind that you will no longer be able to contribute to an HSA.
Part B Dangers
If you're going to enroll in Medicare Part B, medical insurance, the first thing you must do is to ensure you you qualify for a Special Enrollment Period. To qualify, you must have had creditable coverage since turning 65 with no gaps in coverage of eight months or more. If you do not qualify, you will have to wait for the General Enrollment Period, which occurs January 1 - March 31 of each year, to enroll.
After enrolling in Part B, you must make other important coverage decisions related to choosing a Medicare Advantage plan, or a Medicare Supplement policy and Part D drug plan.
If you would like to go back to work later on and give up Part B in order to go back on an employer's health insurance plan, Social Security will require you to schedule an interview with them to discuss your situation and complete the necessary paperwork.
Here's the danger. Since you've already been enrolled in Part B, depending on where you live, you may no longer be able to get a Medicare Supplement (Medigap) policy. In most states, you will not have a Guaranteed Issue Right to get a policy. This means you will likely have to go through medical underwriting to get this coverage, and, if you have any pre-existing medical conditions, you may not be able to coverage.
A Guaranteed Issue Right ensures that an insurance cannot deny your application for a Medicare Supplement because of your medical history. You have this right for six months when initially enrolling in Part B. Known as the Medigap Open Enrollment Period, once this six-month period begins, it cannot be changed or repeated. In other words, you do not get another guaranteed issue right when returning to Medicare at a later time.
COBRA Dangers
Another common consideration for employees laid off during this time is to go on the company's COBRA coverage. For many people, COBRA looks and feels exactly like the coverage they've always had but with a higher price tag.
However, according to Medicare regulations, as soon as health coverage is no longer related to active employment (being laid off means that you are no longer actively employed), health coverage through an employer becomes secondary to Medicare. This essentially means that, if you choose to go on COBRA, you must also enroll in Medicare Parts A and B. Without enrolling in Medicare, you will be the primary payer, paying most, if not all, of your health care bills completely out of your own pocket!
Don't forget! Once you're enrolled in Medicare Part B, the clock starts ticking down on your Guaranteed Issue Right to get a Medicare Supplement policy. Regardless of whether or not you go back to work, once your six-month Guaranteed Issue Right period begins, it cannot be changed or repeated.
The Bottom Line
If you must enroll in Medicare during these difficult times, know that undoing it later will likely be difficult and have long-lasting repercussions.
If you need additional assistance related to your Medicare decisions, please consider reaching out to your financial advisor, using the i65 Medicare software, or engaging in a one-on-one consultation through 65 Incorporated to avoid potential costly, permanent mistakes.
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1 – https://www.stlouisfed.org/on-the-economy/2020/march/back-envelope-estimates-next-quarters-unemployment-rate
2 – Health Savings Account /topics/out-pocket-medicare-costs/should-i-continue-contribute-hsa-until-i-enroll-medicare/
3 – suspending Part B, medical insurance https://faq.ssa.gov/en-us/Topic/article/KA-02713 guaranteed issue right https://www.65incorporated.com/topics/original-medicare/what-guaranteed-issue-right/
4 – cannot be changed or repeated https://www.medicare.gov/supplements-other-insurance/when-can-i-buy-medigap