Ms. A. had been eligible for Medicare due to her disability. On January 1, 2020, she returned to work. Because her new work income was greater than “substantial gainful activity”[1] (SGA) her monthly Social Security (SSA) Disability Insurance cash benefits (DI benefits) were ending.
Throughout 2020, Ms. A. received conflicting information about her disability health insurance (D-HI) Medicare eligibility from SSA/Medicare and her employer, causing Ms. A to file a request with SSA (Form CMS-1763) to terminate her Medicare coverage in favor of her employer coverage. Ms. A’s employer has less than 100 employees.
Question: What are Ms. A’s appropriate options for health insurance, either through Medicare or her Employer’s Group Health Plan (EGHP), and can the appropriate health insurance be re-instated retroactively for 2020 coverage?
Brief Answer: The answer depends on whether Ms. A. was terminated from DI and D-HI Medicare Part A benefits based on medical recovery, or if she remained entitled to D-HI Medicare Part A benefits based on a disabling condition that still meets SSA rules. Losing eligibility for DI benefits due to SGA does not negate beneficiary entitlement to extended Medicare benefits for 8.5 years (which includes a nine-month trial work period and an additional 93 months of eligibility).[2] The only way to sever Medicare entitlement is either by ceasing the disability with medical recovery (termination) or, if the disabling condition continues (entitlement continues), returning all previous benefits conferred since the disability application.[3]
Having Medicare Part A entitlement continue after Social Security Disability Insurance benefits end due to Substantial Gainful Activity causes a particular problem for a disabled beneficiary working for an employer with less than 100 employees, thus making Medicare the primary payer according to coordination of benefit rules.[4] The beneficiary should also keep Medicare Part B benefits in place because: 1) the EGHP will only be a secondary payer; 2) if the beneficiary stops Medicare Part B, she would likely have to wait to regain coverage through the Medicare general enrollment period (creating a potential gap in insurance coverage); and 3) the beneficiary may incur Part B penalties.[5]
[Note: In this case study, if Ms. A’s employer had 100 or more employees, then the EGHP would be primary and Medicare would be secondary.[6] Ms. A. could keep premium-free Medicare Part A, and stop paying for Part B without penalty, or use Part B as secondary to the EGHP.]
Unfortunately, Medicare coordination of benefit rules are inflexible to individual circumstances, complicated to navigate, and could have severe unintended consequences to a beneficiary if not followed properly.
Legal Analysis
- What Should Ms. A.’s Health Insurance Have Been in 2020?
For Medicare purposes, when a disabled beneficiary starts earning SGA, it must first be determined if a) the disability ceased due to the beneficiary’s medical recovery, or b) the beneficiary is working with the disabling condition, but as she is making SGA, the beneficiary can no longer receive monthly DI benefits.
- Loss of DI benefits – Based on Medical Recovery[7], With No Trial Work Period (TWP)[8] Medicare coverage based on a disability will end if such disability ends.[9] When Ms. A. began employment on January 1, 2020, if she had achieved “medical recovery” (meaning she no longer had a disabling condition per SSA rules), her Medicare should also have terminated the later of 1) the month in which her entitlement to DI benefits ended, or 2) the month after the month in which the benefit termination notice was sent to Ms. A.[10] Under these circumstances, once DI benefits and Medicare coverage terminated, she likely should have enrolled in her work EGHP.
- Loss of DI benefits – Not Based on Medical Recovery, Based Only on SGA
If SSA determined Ms. A still had a medical disability when she started working (even though DI benefits would end because she was making SGA level earnings), her entitlement to Medicare coverage would continue.[11] Because she would be entitled to Medicare based on her disability, and her employer had less than 100 employees,[12] Medicare coverage would be primary and the EGHP would be secondary.[13] If Medicare coverage is primary, Ms. A. should continue to have Medicare Part B to cover medical insurance as the primary payer (and to avoid subsequent Part B penalties[14] and a potential gap in insurance coverage if she stopped Part B and had to re-enroll in Part B during the Medicare general enrollment period.) The EGHP may be secondary insurance.
- If Ms. A. attempts to discontinue Medicare[15] and only have EGHP coverage, as the EGHP is in the secondary payer position (given Ms. A’s ongoing entitlement for Medicare), the EGHP will not be primary payer. Ms. A should have Medicare primary and employer GHP secondary.
- If Ms. A. attempts to terminate Medicare while she is still “entitled” to Medicare (as long as the disabling condition meets SSA rules, she would be entitled to Medicare for 9 months of TWP and 93 additional months – total of 8.5 years), she may be required to return all benefits previously received through Social Security and Medicare.[16] The only way to avoid entitlement to Medicare Part A is to forego the source of the entitlement and repay all benefits received, including health insurance payments made.[17] If Ms. A. achieves medical recovery at any time during the 8.5 year period, and therefore no longer meets Social Security disabling condition rules, her entitlement to Medicare will terminate.[18]
- What Should Ms. A. Do Now To Obtain Appropriate Health Insurance Coverage Retroactive for 2020?
Based on the misinformation Ms. A. received from Social Security/Medicare and her employer, about what correct course of action she should have taken, Ms. A. should be entitled to Equitable Relief for the appropriate health coverage to be re-instated retroactively.
- If Ms A. began employment on January 1, 2020 having achieved “medical improvement”, her Medicare should have terminated when her Social Security cash benefits terminated. When Medicare ceased, her EGHP likely should have become her primary insurance. Therefore, Ms. A should request relief from her EGHP to enroll as of the time Medicare terminated. [Note: This recommendation is to the employer, but it is outside the scope of Medicare analysis.]
- If Ms. A. began employment and she still has her disabling condition that meets SSA rules, Ms. A. should be entitled to Equitable Relief from Medicare and continuous Medicare coverage should be re-instated, despite her request during 2020 to terminate Medicare. Ms. A. is entitled to equitable relief because she was provided misinformation, about her insurance choices and the attendant consequences, by Social Security and/or Medicare and/or her employer and/or her EGHP.[19] This equitable relief should ensure that Medicare continuously remains the primary payer and the EGHP could be the secondary payer.[20]
February 11, 2021 – K. Holt
[1] In 2020, a non-blind person who is earning more $1,260 a month ($1,310 in 2021) (net of impairment-related work expenses) is ordinarily considered to be engaging in SGA. https://www.ssa.gov/oact/COLA/sga.html
[2] 42 United States Code (U.S.C.) Section 426(b); https://medicareadvocacy.org/medicare-info/medicare-coverage-for-people-with-disabilities/.
[3] POMS HI 00820.025A.4 Termination of Disability https://secure.ssa.gov/poms.nsf/lnx/0600820025; POMS HI 00801.002 (B) Waiver of Entitlement By Monthly Beneficiary – Individuals entitled to monthly benefits which confer eligibility for HI may not waive HI entitlement. The only way to avoid HI entitlement is through withdrawal of the monthly benefit application. Withdrawal requires repayment of all RSDI and HI benefit payments made. https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801002; POMS GN 00206.020(D) Hospital Insurance and Withdrawal https://secure.ssa.gov/poms.nsf/lnx/0200206020
[4] https://www.medicare.gov/Pubs/pdf/02179-Medicare-Coordination-Benefits-Payer.pdf, page 18.
[5] https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty
[6] Id.
[7] Social Security – The Red Book – Returning to Work (ssa.gov) If we find that your disability ceased due to medical improvement, our decision is effective in the month shown by the evidence, or the month we give you written notice, if later. In either case, we pay SSDI benefits for the cessation month and the following two months. We call these three months the “grace period”.
[8] POMS HI 00820.025A.4 Termination of Disability https://secure.ssa.gov/poms.nsf/lnx/0600820025
[9] Social Security Program Operating Manual System (POMS) HI 00820.100 Cessation of Disability https://secure.ssa.gov/apps10/poms.nsf/lnx/0600820100
[10] POMS HI 00820.025A.3 Termination of Disability https://secure.ssa.gov/poms.nsf/lnx/0600820025 If DI benefits end because of SGA, but after a TWP is completed.
[11] 20 Code of Federal Regulations 404.640 Withdrawal of Application https://www.ssa.gov/OP_Home/cfr20/404/404-0640.htm; POMS HI 00801.002 Waiver of HI Entitlement by Monthly Beneficiary https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801002; POMS HI 00801.034 Withdrawal Considerations https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801034; POMS GN 00206.020 Hospital Insurance and Withdrawal https://secure.ssa.gov/apps10/poms.nsf/lnx/0200206020#d3.
[12] If Ms. A’s employer has 100 or more employees, or her employer belongs to a multi-employer group with 100 or more employees, the EGHP would be primary and Ms. A. would only have to carry mandatory Medicare Part A. https://www.medicare.gov/Pubs/pdf/02179-Medicare-Coordination-Benefits-Payer.pdf, page 18.
[13] Medicare Publication Your Guide to Who Pays First https://www.medicare.gov/Pubs/pdf/02179-Medicare-Coordination-Benefits-Payer.pdf, page 18.
[14] Id.
[15] Withdrawing from Medicare can be achieved by filing form CMS1763. CMS 1763 Request for Termination of premium Hospital and/or supplementary Medical insurance. SSA has procedures to ensure beneficiaries understand the potential dire consequences of withdrawing from Medicare entitlement.
[16] Participation in Medicare Part A is statutorily mandated for those who are disabled or over age 65 and receiving Social Security benefits. 42 United States Code Section 426(b)(C); Bowen v. Michigan Academy of Family Physicians, 476 US 667, 674-675 (describing Medicare Part A as “ Mandatory Institutional Health Benefits”); (see also Hall v. Sebelius Civil Action No. 08-1715 (RMC) https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2008cv1715-54); As long as a disabling condition still meets SSA rules, a beneficiary is entitled to keep Medicare coverage for at least 8 ½ years after the beneficiary returns to work (102 months). (The 8 years includes the nine-month trial work period.) https://www.ssa.gov/disabilityresearch/wi/extended.htm
[17] 20 Code of Federal Regulations 404.640 Withdrawal of Application https://www.ssa.gov/OP_Home/cfr20/404/404-0640.htm; POMS HI 00801.002 Waiver of HI Entitlement by Monthly Beneficiary https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801002; POMS HI 00801.034 Withdrawal Considerations https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801034; POMS GN 00206.020 Hospital Insurance and Withdrawal https://secure.ssa.gov/apps10/poms.nsf/lnx/0200206020#d3.
[18] https://www.ssa.gov/disabilityresearch/wi/extended.htm
[19] Policy behind equitable relief and proof needed POMS HI 00805.170 Conditions for Providing Equitable Relief https://secure.ssa.gov/apps10/poms.nsf/lnx/0600805170; POMS HI 00805.320 Equitable Relief for Disabled Individuals Covered Under a GHP/LGHP https://secure.ssa.gov/poms.nsf/lnx/0600805320; see also POMS HI 00805.310 Disability SEP Enrollments https://secure.ssa.gov/poms.nsf/lnx/0600805320.
[20] If Ms. A was over age 65, equitable relief would only be available if an agency of the government (e.g. Medicare, Social Security, a Medicare Contractor) provided her with the misinformation that led to an inappropriate choice of coverage. POMS HI 00805.175 HI 00805.175 Evidence of Government Error or Delay https://secure.ssa.gov/apps10/poms.nsf/lnx/0600805175