The short answer to this is no, you will not lose coverage just because you get a part-time job. With that being said, there are several situations and options to explore if you are receiving Medicare benefits and are going back to work. The situation can get a bit complex under some circumstances, notably if you choose to drop Medicare coverage then seek it back. Let’s take a look at the options.
When can you actually lose your Medicare coverage?
There are two main times that you can straightforwardly lose Medicare coverage. The first is if you have Medicare as the result of a disability and you are no longer medically disabled. Medicare disability coverage is restricted to those who are currently dealing with a disability. This is a rare situation, since most disabilities that qualify don’t simply go away.
If you are under 65 and have a disability, and also qualify for Medicare and then return to work, you will be able to keep your coverage without paying premiums for Part A for 8 and a half years. After that, you can still keep your coverage, but will have to pay a premium.
Second, you can lose Medicare coverage if you enroll in a health savings account. We'll discuss this in more detail below.
Choosing to drop coverage
Although getting a job after you are covered by Medicare won’t cause you to lose your coverage, some people may be offered a health care plan from their employer which is more attractive than Medicare. If you are offered a group plan, there are a few distinct situations that you may find yourself in. But, to reiterate, Medicare will not drop your coverage just because you are employed.
If you drop your coverage, make sure to contact Social Security. They will be able to help walk you through the process and explain any additional consequences specific to your situation.
If you find creditable coverage
When discussing health insurance related to Medicare, you may hear the term “creditable” used to describe an insurance plan. This means that the plan is considered to be as good as Medicare -- specifically as good as Medicare Part A and Medicare Part B. The actual description is a bit more complex, but that is a good working definition.
If your employer offers creditable health coverage, you can accept it and drop your Medicare coverage. If and when you eventually lose or drop your employer coverage. you will have an 8 month long Special Enrollment Period during which you can enroll again in Medicare. You won’t face any fees in this situation.
If you find coverage that isn't creditable
If your coverage isn’t creditable, you will still be able to drop Medicare to switch to it. However, you may have to pay fees in the form of a late enrollment penalty if you re-enroll in Medicare, and re-enrolling can be more difficult. Generally speaking, it isn’t a good idea to drop Medicare for non-creditable coverage, although everybody’s situation is different.
If you receive SSDI payments
Some disabled individuals receive disability payments from the Social Security Administration, and are also eligible for Medicare on that basis. If you have Social Security Disability Insuranceand then start working again, your Medicare eligibility won't change at all.
Can you have Medicare and an employer-based plan at the same time?
Yes, you can. If you become employed and are offered a group health plan, you can enroll in that plan while still keeping your Medicare coverage. In this situation. Medicare will function as your secondary payer, which means that they will cover you when your primary insurance doesn’t.
This can be a good option for some, but it depends on your specific situation. Especially for those who receive premium-free Medicare Part A coverage, keeping that coverage is a no-brainer.
What about Medicare Supplement plans?
Medicare Supplement plans, also known as Medigap plans, uniquely fit into these situations. These plans are only available to individuals who are enrolled in Original Medicare. This means that if you drop or lose your Medicare coverage, then you will drop your Medicare Supplement plan coverage as well.
A notable key element here is the fact that insurance companies that sell Medicare Supplement plans are allowed to use medical underwriting. This means that they can decide not to sell you a plan based on your pre-existing conditions or health status.
However, they are not allowed to do this when you first become eligible for Medicare. If you enroll in a Medigap plan during the Medicare Initial Enrollment Period, then you will be able to purchase any Medicare Supplement plan that you like, without the company being able to use underwriting.
If you then drop your Medicare coverage, you will drop your Medicare Supplement plan coverage as well. In this case, insurance companies will be able to use underwriting if you try to purchase a plan later on. This can be a significant burden for some, so make sure you think to make an informed decision if you have a Medigap plan.
Medicare Part D plans
If you are enrolled in a Medicare Part D plan, you will only be able to keep this plan so long as you are enrolled in Part A or Part B. Part D plans offer prescription drug coverage, and are a popular way for enrollees to get this type of coverage.
If you choose to drop your Medicare coverage, be aware that you will have to lose your drug plan as well.
A note on health savings accounts
A health savings account, or HSA, is a type of insurance policy that is based on saving money in an account and then using it for medical expenses. If you have one of these plans, you cannot retain it and enroll in Medicare at the same time.
This means that if you are already enrolled in Medicare and your employer offers a health savings account, you will have to give up your Medicare coverage to enroll. This is overall a very rare scenario, but you should make sure to understand it if you are drawn to HSA plans. Medicare has a similar option, known as the Medicare Savings Account, that you can look into instead.
Conclusions on Medicare and part-time employment
If you receive Medicare benefits and are getting ready for part-time employment, you do not have to worry about losing your coverage. Medicare will be with you no matter what your employment status is.
However, make sure that you look at your situation in detail if you are planning on switching to or adding on an employer-based health plan. While this will be the right option for some, it involves complexities that you will have to think about carefully. This is especially so if you have a Medicare Supplement plan.
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