When you reach retirement, you’re virtually guaranteed to earn the support of two foundational social safety nets: Social Security and Medicare.
But they’re not technically guaranteed. Not only is it possible to not qualify for one, the other, or both, but it’s also possible to lose these backstops even after you’ve already started receiving them.
We’ve previously covered ways of losing Social Security, so today we’re going to focus on America’s health care safety net.
Your Medicare coverage can absolutely be discontinued, but exactly how that can happen has been muddied in myths and misinformation. To help you get a clearer picture, I’m going to walk you through the very real ways Medicare could slip through your fingers … and then I’ll show you a few ways you won’t lose Medicare.
Ways in Which You Can Lose Medicare
Medicare is a national health insurance program that’s divided into parts. The part of Medicare covering critical care (Medicare Part A) is free for most Americans, while the others come at a cost.
According to the Centers for Medicare & Medicaid Services, more than 67 million Americans receive health care coverage through Medicare. While some people receive Medicare coverage because they have a disability or certain medical conditions, most become eligible for Medicare by turning 65 years old.
That’s how you get Medicare. But once you have it, it’s possible to lose it.
Medicare is complex—indeed, in MedicareAdvantage.com’s 2023 Medicare Literacy Survey, almost two-thirds (65%) of Medicare beneficiaries polled said the program is confusing and difficult to understand. Those complexities can confuse policyholders, and in some cases, lead to slip-ups big enough to cause coverage to be discontinued.
Below are several ways to lose Medicare benefits, presented in plain, easy-to-understand language. Understanding these potential pitfalls is important because, in some situations, losing your benefits might be perfectly avoidable.
1. You Don’t Pay Your Monthly Premiums
The most obvious way to get dropped from Medicare? Don’t pay your premiums.
You’ll often see people refer to “Original Medicare,” which refers to two specific parts of Medicare:
- Part A: Covers the most urgent and critical aspects of health care, including services at inpatient hospitals, skilled nursing facilities, inpatient rehabilitation centers / clinics, hospice centers, and select health care needs delivered in-home.
- Part B: Focuses more on preventive and medically necessary services and supplies, such as outpatient hospital services, physicians’ services, select home health services, durable medical equipment, and certain other medical and health services not covered by
While around 99% of Medicare users don’t have to pay Part A health insurance premiums, just about everyone has to pay for Part B. The standard monthly Medicare Part B premium for 2024 was set at $174.70 for individuals with a modified adjusted gross income [MAGI] of $103,000 or less. The premium amount increases with income.
You’re billed for Part B (and, if applicable, Part A) every three months. You’ll be given a due date—however, you have a 90-day grace period after the due date in which to pay your premium. If you do not, you risk termination of your coverage, and you will still be responsible for the amount owed.
Medicare Part C (Medicare Advantage) and Part D have similar conditions—failure to pay a premium by the end of the grace period may trigger a discontinuation of coverage—though the length of the grace period varies by provider.
Related: How to Max Out Your 401(k) + Other Retirement Accounts
2. You Recover From a Disability
While most Medicare recipients qualify through the age minimum, some become eligible at a younger age because they have a qualifying disability. Research from health care nonprofit KFF found that in 2022, around 7.7 million people under age 65 had Medicare coverage—that’s roughly 12% of all Medicare beneficiaries.
Disability-based Medicare eligibility is determined by the Social Security Administration (SSA). And a person must first qualify for Social Security Disability Insurance (SSDI) before they can become eligible for disability-based Medicare. Once you’re eligible for SSDI, you’re automatically eligible for Medicare after a 24-month qualifying period. While you wait for Medicare coverage, you might be eligible to use health insurance from a previous employer. To see if this is possible, contact the employer directly.
The majority of disabilities that make a person eligible are permanent or expected to cause death—but not all of them. For people who have disabilities that aren’t necessarily permanent to receive benefits, there must be evidence that the impairment has continued or is expected to last continuously for at least a year.
However, if you recover from a temporary disability, that can mean a loss of Medicare coverage.
Returning to work can sometimes be a sign of a person recovering from a disability. But if your disabling condition still meets the proper guidelines, you can keep Medicare coverage for at least 8½ years after returning to work (more on this later).
There are other instances and rules depending on the disability. For example, Medicare.gov provides an example of qualifying for Medicare because of permanent kidney failure; if you were to get a kidney transplant, your benefits would end 36 months later.
Again, the SSA is ultimately responsible for ruling on your eligibility for disability-based Medicare. If they determine you no longer qualify for disability benefits as a result of recovering from a SSA-determined disability, your Medicare disability benefits will end, too.
Related: HSA Rollover: How to Transfer HSA Funds to a New Provider
3. You Commit Medicare Fraud
Medicare fraud—whether purposeful or accidental—could cease your coverage. A few ways a person might commit Medicare fraud include the following:
- Lying about your income on your application to lower your premiums
- Allowing another person to use your Medicare card for care or supplies
- Selling your Medicare number to someone who bills for services not received
- Giving out your Medicare number in exchange for money or a gift
Importantly, if a scammer gains access to your personal information, they could commit fraud with it—and you could be blamed. So you have to also be aware of scams. Never give away your Medicare number or Social Security Number to anyone you don’t know. If a person unexpectedly calls you and asks for this information, it’s a scam—these agencies will only call you if you’ve called and left a message, or if you’ve already been informed that a representative will return your call. Be aware of phishing scams, in which people try to get you to click malicious links in email. And in general, be cautious of who you provide your Medicare and Social Security numbers to.
Related: How Much to Save for Retirement by Age Group [Get on Track]
4. Your Plan Was Discontinued
It’s possible to lose Medicare coverage without a change in your eligibility.
Medicare plans can be changed or discontinued. The Centers for Medicare and Medicaid Services might discontinue Medicare Advantage or Part D plans that are underperforming. Alternatively, a private carrier might drop a certain plan or go bankrupt and stop offering any plans.
The good news is that, because your eligibility wasn’t affected, you can re-enroll for Original Medicare. You should qualify for a Special Enrollment Period and be able to start up coverage again quickly.
Related: SEP IRA vs. Roth IRA: What’s the Difference?
Ways in Which You Won’t Lose Medicare
It should be no surprise, given just how intricate Medicare is, that confusion has paved the way for a few misconceptions about how to lose your eligibility and coverage.
Let’s review a few actions you might think disqualify a person from Medicare but actually don’t.
1. You Keeping Working or Return to Work
When you turn 65, which is when you become eligible to enroll in Medicare, you might still be in the workforce. Or you might not still be working, but you might eventually decide to rejoin the workforce later. Either way, doing so won’t affect your Medicare eligibility.
Typically, if your employer has at least 20 employees, you’ll have three choices:
- Delay Medicare enrollment
- Stop your employer coverage and just use Medicare
- Have both types of coverage
If your employer has fewer than 20 employees, you’ll generally need to enroll in Medicare during your Initial Enrollment Period. People who get coverage through a spouse must check specific employer’s rules to determine whether they can delay or need to enroll at age 65.
And if you’re disabled? “You can keep your Medicare coverage for as long as you’re medically disabled,” says Medicare.gov. “If you return to work, you won’t have to pay your Part A premium for the first 8½ years. After that, you might be able to buy Part A coverage and pay a monthly premium. If you can’t afford the Part A premium, you may be able to get help from your state.”
Related: How Much Should I Contribute to My 401(k)?
2. You Get a Pay Raise
There is no income limit for Medicare. So, much like you don’t have to worry that you’ll have too high an income to become Medicare-eligible, you don’t have to worry that a substantial pay increase will cause your Medicare benefits to end.
However, a higher income could affect your premiums for Medicare Part B and Medicare prescription drug coverage.
Most Medicare beneficiaries pay 25% of their Part B premium, while the government foots the bill for the rest. But if you’re considered a high-income beneficiary, you pay a larger percentage of your premium. Based on the income you report to the IRS, higher earners could pay between 35% to 85% of the total premium cost.
Similarly, for most beneficiaries, the government pays a significant portion of the total costs for Medicare prescription drug coverage (Part D). Costs vary by plan, but high-income earners pay monthly premiums plus an additional amount, which is again determined by the income reported to the IRS.
Related: IRA vs. 401(k): How These Retirement Accounts Differ
3. You Live in Another Country (Part A + B Only)
It can be tempting to see what it’s like to live abroad, particularly once you hit retirement and aren’t tied to a job. The World Population Review estimates that there are currently more than 8 million American expats living overseas. Of course, if you’re using Medicare and you’re considering doing your own version of Eat, Pray, Love, you’ll want to know how that affects your benefits.
You must be a U.S. citizen or permanent legal resident to qualify for Medicare Parts A and B, but you don’t need to live in the United States. So unless you renounce your American citizenship, you’re good to go.
But just because you can keep Medicare and travel extensively or even live abroad as an American for Part A and Part B doesn’t necessarily mean it’s the most strategic option.
If your premiums for Part A are covered, there is only one real significant downside to remaining enrolled: You wouldn’t be allowed to contribute to a health savings account (HSA). However, if you must pay Part A premiums, and/or if you have Part B, it might be best to skip coverage as you wouldn’t get much use for your money.
Medicare Parts C and D, which are offered by private insurers, have stricter rules. Usually, these plans require you to live within the plan’s service area for at least six months out of the year. (That might or might not conflict with your hopes of living as an expat, but it at least leaves plenty of time to travel.)
Related: Health Care Costs in Retirement [Amounts & Types to Expect]
What Happens If You Become Incarcerated?
A stint in prison or jail can affect your Medicare coverage, too.
If you are incarcerated for fewer than 30 days, and you previously were covered by Medicare, you will not be covered by Medicare while incarcerated, but you still will be responsible for paying premiums. That said, you will not lose eligibility, and your health care needs will be covered by the penal authorities. Once you are released, your Medicare coverage will resume.
If you are incarcerated for 30 days or more, and convicted of a crime, your Social Security retirement or disability benefits will also stop. However, they can be reinstated after your release. That said, if you are under age 65 and previously received Medicare for a disability, you must have your SSDI reinstated before Medicare coverage will resume.
