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When Can Your Insurance Company Drop Your Medicare Coverage?

October 6, 2016

Insurance coverage is important to ensure that you are able to get the medical care you need, when you need it. With the costs of such services rising drastically in recent years, it is more important than ever to make sure you have adequate coverage. Even if you have Medicare, it may surprise you to know that it is possible to lose your coverage. This article addresses circumstances that may result in loss of coverage depending upon the type of Medicare coverage you selected and what you may be able to do to regain coverage or avoid losing coverage.

Original Medicare

If you are enrolled in Original Medicare, Part A (hospital insurance) and Part B (medical insurance), you can lose your coverage if you do not make your premium payments. In this situation, you will receive two warnings in the mail: a Second Notice (after your usual payment notice) and then a Delinquent Notice that will encourage you to make your payment. The Second Notice reminder provides a payment due date that you must meet; a Delinquent Notice will be mailed out once that deadline has passed. When you receive the Delinquent Notice, you have until the 25th of the month in which you receive the notice to make payment. Failure to do so will result in the termination of your Medicare coverage.

If your financial circumstances are such that you cannot afford your Medicare premium, you may be eligible for the Medicare Savings Program, which is available in every state. The Medicare Savings Program is designed to assist eligible Medicare beneficiaries with payment of their Medicare premiums and, in some instances, Part A and Part B copayments and coinsurance. To learn more, you may contact your state health insurance assistance program (SHIP).

Another circumstance in which you will lose your Medicare coverage is if you are no longer eligible to receive Medicare. This situation may arise if you are younger than age 65 and had Medicare coverage as a result of a medical condition that caused you to receive disability benefits from the Social Security Administration or Railroad Retirement Board for more than 24 months. If you no longer have a medical disability, you may lose your Medicare coverage.

Medicare Advantage

If you are enrolled in a Medicare Advantage plan or a Medicare Advantage Prescription Drug plan, you may lose your coverage if you fail to pay your plan’s premium or your Medicare Part B premium. Medicare Advantage plans, with and without prescription drug coverage, are offered by Medicare-approved private insurance companies and provide at least the same benefits as Part A and Part B (except for hospice care, which remains covered under Part A). Many Medicare Advantage plans offer additional benefits. Medicare Advantage plans can establish their own practices regarding non-payment or late payment of the plan’s premium. Therefore, it may be prudent to contact the plan if you are experiencing difficulties in making premium payments.

You may lose your Medicare Advantage coverage if you move outside the plan’s service area. In this situation your Medicare Advantage plan will send you a notice that you are no longer eligible to be a member; you qualify for a Special Election Period that enables you to select a new Medicare Advantage plan where you live or return to Original Medicare (Part A and Part B) coverage and possibly select a stand-alone Medicare Part D Prescription Drug Plan to work alongside your Original Medicare coverage.

To enroll in a particular Special Needs Plan (a specialized type of Medicare Advantage plan), you must meet the plan’s eligibility requirements, in addition to the general requirement for enrolling in a Medicare Advantage plan. You can stay enrolled in a Special Needs Plan only if you continue to meet the special conditions served by the plan. If you lose eligibility for the plan, you will have a Special Election Period to make another choice. You will receive a Special Election Period to sign up for a different Medicare Advantage plan or return to Original Medicare.

Other circumstances in which you could lose your Medicare Advantage coverage include such situations as Medicare’s terminating its contract with the Medicare Advantage plan in which you are enrolled or the Medicare Advantage plan’s deciding it will not offer coverage in the coming year where you live. In these instances you would be provided sufficient advance notice to change Medicare plan coverage during the Annual Election Period, or would qualify for a Special Election Period to enroll in a Medicare Advantage plan or return to Original Medicare, Part A and Part B.

Stand-alone Medicare Part D Prescription Drug Plan

Loss of coverage in a stand-alone Medicare Part D Prescription Drug Plan may follow many of the same situations described above: failure to pay plan premiums; relocation outside the plan’s service area; the plan’s decision to withdraw from the market or the area where you live in the coming year; or Medicare’s decision to terminate its contract with the Medicare Part D Prescription Drug Plan. Usually you will be provided the opportunity to change to another Medicare Part D Prescription Drug Plan.  The exception may be failure to pay an applicable premium. If you have a low income, you may qualify for the Part D Extra Help program, which assists beneficiaries with their prescription drug costs, including premiums and, in many cases, deductibles, coinsurance, and copayments. Your State Health Insurance Assistance Program (SHIP) can provide additional information about the Extra Help program.

Medicare Supplement Insurance

Medicare Supplement plans are offered by private insurance companies and can help you pay out-of-pocket costs for services covered under Medicare Part A and Part B. If you purchased a Medicare Supplement Plan (also called Medigap) in 1992 or thereafter, then your policy is guaranteed renewable. Under limited circumstances you could lose your Medicare Supplement plan coverage, however. These circumstances include:

  • Failure to pay the plan’s premium
  • Untruthfulness in statements made in the application
  • Plan insolvency

About Guaranteed Issue Rights

Guaranteed issue rights, known also as “Medigap protections,” offer protection for those who have lost their Medicare Supplement coverage under certain scenarios, or who have lost coverage from an employer-sponsored group health plan. These protections generally allow a Medicare beneficiary to purchase a new Medicare Supplement policy outside of the Medigap Open Enrollment Period (OEP).

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