Dropping a Medicare Plan (Or Being Dropped) - dummies

Dropping a Medicare Plan (Or Being Dropped)

By Patricia Barry

Copyright © 2015 AARP

Most people can voluntarily leave a Medicare Advantage or Part D drug plan only during the open enrollment period, the disenrollment period, or a special enrollment period. Usually, this situation happens when you switch from one kind of coverage to another. But in some circumstances, you may need to cut ties with a plan without joining another. And in a few situations, your plan can cut ties with you.

Leaving a Medicare plan on your own

You can get a special enrollment period to drop out of a Medicare Advantage or Part D drug plan without joining another in the following circumstances:

  • You get health benefits from a new job. You can opt out of Part B after being enrolled in it if your situation changes and you begin getting health coverage under your own or your spouse’s new job. You can also ditch your Part D drug coverage in these circumstances. Here’s what to do:

    • Find out whether your new drug coverage is creditable. If it’s not creditable, you need to ask whether keeping your present Part D plan can disqualify you from the employer’s health plan.

    • Call or write to your current plan, explain the situation, and ask to be disenrolled. You need to coordinate the date when your Part D coverage ends with the date when your new coverage begins.

  • You become eligible for TRICARE or VA drug coverage. You can get an SEP to drop out of your current plan if you start qualifying for military or veterans’ benefits under the TRICARE or Veterans Affairs programs.

  • You move out of the United States. From your plan’s point of view, going to live abroad just means that you’re moving out of its service area. But in this case, you won’t be joining a new plan because you can’t get Part D drug coverage (or any kind of Medicare benefits) abroad. In this situation, call the plan and disenroll. If and when you return to live permanently in the United States, you can apply for another two-month SEP to enroll in a plan that provides Part D drug coverage.

  • You decide you just want out of your plan. You don’t get a special enrollment period for this purpose. If you’re in a Medicare Advantage or Part D plan, you’re expected to wait until the open enrollment period (with the option, if you’re in an MA plan, of instead using the disenrollment period). But if you get an SEP to disenroll from a plan at other times of the year — for example, if you’re moving out of its service area — you aren’t obligated to sign up for another plan. Similarly, you don’t have to sign up for another plan if you come to the end of the year and decide not to reenroll. (In the latter case, you need to request disenrollment; otherwise, your enrollment automatically continues the following year.) And of course, you don’t have to reenroll if you stop paying premiums and get dropped by your plan (as explained in the next section).

If you leave a plan that provides drug coverage and don’t enroll in another, Medicare will probably send you a warning letter about risking late penalties if you decide to reenroll in the future. But beyond the threat of late penalties, if you won’t be covered by any of the types of coverage described in the preceding list, what you really need to think about are the consequences of being without drug coverage for even a few months.

Getting the boot from your Medicare plan

A plan must disenroll you (it has no choice) in any of these situations:

  • You move permanently out of its service area. If you don’t let the plan know you’ve moved, it will eventually find out from Medicare or from returned mail. The plan must try to confirm that the move is permanent, but if it can’t contact you within six months or it receives no response, it must then disenroll you. (However, if it confirms that your move is only temporary, it must continue your coverage.)

  • You’re imprisoned. Because you lose Medicare coverage when incarcerated, the plan must disenroll you after confirming the situation from public records. (But when you’re released, you have the right to a two-month SEP to sign up with a plan again.)

  • You lose your eligibility for Medicare. This scenario is unusual but can happen in these specific circumstances:

    • If your eligibility for Medicare is based on disability but your condition improves and your disability payments end, your Medicare coverage will also eventually be terminated.

    • If you pay premiums for Part A, you must also be enrolled in Part B. If you stop paying either Part A or Part B premiums (or notify Social Security that you no longer want this coverage), your eligibility for Medicare (and Part D) ends.

  • You’ve misrepresented other coverage you have. If the plan receives evidence that you intentionally withheld or falsified information about drug coverage you have from an employer — in other words, that you’re double dipping — it must disenroll you when it has Medicare’s permission. Your coverage stops on the first day of the month after you’re notified that you’re being dropped from the plan.

  • You die. Of course, at this point, you don’t exactly have to worry about Medicare. But here’s some info for the benefit of family members: They can inform your Medicare Advantage or Part D drug plan, but it won’t act until it’s received an official death notification from the Social Security Administration via Medicare. Disenrollment takes effect on the last day of the month after the death. The plan must refund any premiums paid beyond that date.

A plan can drop you at its discretion in these circumstances:

  • You don’t pay your premiums in a timely manner. Because disenrollment for stopping or being late paying premiums varies according to plans’ individual policies.

  • You “engage in disruptive behavior.” Medicare doesn’t define exactly what this phrase means, except to describe it as behavior that “substantially impairs” the plan’s ability to provide services to you or any of its other members. The plan can’t drop you for this reason without first trying to solve the problem, submitting thorough documentation to Medicare, and receiving Medicare’s go-ahead to disenroll you. The plan must also notify you of your right to appeal the decision. Depending on the circumstances, Medicare may also grant a special enrollment period for you to switch to another plan without loss of coverage.

  • You allow someone else to use your plan card to obtain services or prescription drugs, or the information on your enrollment form was fraudulent. The plan can terminate your coverage the first day of the month after it notifies you of disenrollment. The plan must inform Medicare, which will investigate the allegation of fraud.