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 and a 32% unemployment rate.
One of the biggest concerns for these workers is losing their health insurance. Some companies say they’ll continue covering their employees 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.
That brings us then to 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 is possible… BUT you must know about some important complications and potentially costly repercussions for “temporary” enrollment in Medicare Part A, Part B and COBRA. We’ll dive into the specific dangers related to each of these in this article.
PART A DANGERSIf 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. You may not be able to this. And, if you are able to drop Part A, you would likely have to repay any Social Security or Part A health benefits you’ve received. Because of this, strongly consider continuing with Part A after returning work. But, remember, you will no longer be able to make contributions to an HSA.
PART B DANGERS After enrolling in Part B, you must make other important coverage decisions related to choosing a Medicare Advantage plan, or a Medicare Supplement plan and Part D drug plan.
If you go back to work later on and have the opportunity to go on the employer’s health insurance, you will likely want to give up Part B. To do this, Social Security will require you to schedule an interview to discuss your situation and complete the necessary paperwork.
Here’s the danger of giving up Part B though. Since you’ve already been enrolled in Part B, depending on where you live, you may not be able to get a Medicare Supplement (Medigap policy) in the future. In most states, you will no longer have a Guaranteed Issue Right. This means you will likely have to go through medical underwriting in order to get this coverage, and, if you have any pre-existing medical conditions, you may not be able to get this coverage.
A Guaranteed Issue Right ensures that an insurance company 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!
Plus, remember that once you’re enrolled in Medicare Part B, the clock starts ticking down on your Guaranteed Issue Right to get a Medicare Supplement plan. Regardless of whether or not you go back to work, as soon as your six-month Guaranteed Issue Right period begins, it cannot be changed or repeated for any reason.
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 do not hesitate to reach out
to Paul Barrett 631-805-5573 or book a FREE consultation at bit.ly/PaulBcalendar