CMS Pub. 100-05, ch. 2, § 10.5

Health Plans (LGHPs)

(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)

[See 42 CFR § 411.104 regarding current employment status]

A. Current Employment Status

An individual has current employment status if the individual is:

• Actively working as an employee, is the employer (including a self-employed

person), or is associated with the employer in a business relationship; or

• The individual is not actively working and is receiving disability benefits from an

employer for up to 6 months (the first 6 months of employer disability benefits

are subject to FICA taxes); or not actively working but meets all of the following

conditions:

° Retains employment rights in the industry;

° His or her employment terminated by the employer if the employer

provides the coverage or has not had his/her membership in the employee

organization terminated if the employee organization provides the

coverage;

° Is not receiving disability benefits from an employer for more than 6

months;

° Is not receiving Social Security disability benefits, and

° Has employment-based GHP coverage that is not COBRA continuation

coverage. [See 29 U.S.C. 1161-1168.]

A person aged 65 or older and receiving disability payments from an employer is

considered to have current employment status if such payments are subject to taxes under

FICA. Employer disability payments are subject to FICA tax for the first six months of

disability after the last calendar month in which the employee worked for that employer.

EXAMPLE: Adam Green stopped working because of disability in December 2021 at

age 63. His employer began paying him disability payments January 2022. Since

disability payments are taxed under FICA for 6 months after the last month in which the

employee worked, Medicare is the secondary payer through June 2022. Beginning with

July 2022, Medicare becomes the primary payer as the disability payments are no longer

considered wages under FICA.

B. Retain Employment Rights [See 42 CFR § 411.104(b)]

Persons who retain employment rights include but are not limited to:

• Those who are furloughed, temporarily laid off, or who are on sick leave;

• Teachers and seasonal workers who normally do not work throughout the year;

• Those who have health coverage that extends beyond or between active

employment periods (e.g., based on an “hours bank” arrangement). (Active union

members in certain trades and industries (e.g., construction) often have “hours

bank” coverage); and

• Those who take an employer-approved temporary leave of absence for any

reason. Temporary leaves of absence include, but are not limited to, periods when

an individual qualifies for short-term or long-term medical disability.

C. Coverage by Virtue of Current Employment [See 42 CFR § 411.104(c)]

An individual has coverage as a result of current employment status with an employer

if the individual has:

• GHP or LGHP coverage based on employment, including coverage based on a

certain number of hours worked for that employer or a certain level of

commissions earned from work for that employer at any time; and

• Current employment status with that employer, as defined above.