If you’re getting close to Medicare eligibility or already there, understanding how your job transition affects your Medicare enrollment is more important than ever. One key factor many people overlook is something called garden leave – and how it impacts creditable coverage for Medicare and potential late penalties.
Let’s break it down in plain English.
What Is Garden Leave?
Garden leave happens when you give notice at your job – say, a classic two-week notice – but your employer tells you not to come back to work, while still paying you. You’re technically still employed, but you’re not working. This can last anywhere from two weeks to several months, depending on your role and employment contract.
It might not be called “garden leave” in your contract. It could go by other names like:
- Paid notice period
- Administrative leave with pay
- Transition period
- Inactive employment status
- Non-compete period with salary
In all of these, you’re still on payroll, not allowed to start a new job, and possibly still getting benefits like health insurance.
Understanding how garden leave might affect you doesn’t have to be hard. At The Medicare Family, we’ve helped thousands of people across all 50 states find the right Medicare plan – at no cost to them. We work with over 30 top insurance companies and explain everything in plain English. Schedule your FREE call today to get expert advice and compare the best plans in your area.
Why This Matters for Medicare
Here’s where things get important for your Medicare timeline—especially Medicare Part D (which covers prescription drugs) and Part B (medical insurance).
If you’re on garden leave and still technically employed, and your health insurance is active group coverage (not COBRA or retiree insurance), that counts as creditable coverage for Medicare.
Creditable coverage means your insurance is good enough that you can delay signing up for Medicare without paying a late enrollment penalty.
So if your company has at least 20 employees and your coverage continues during garden leave, you can safely delay Medicare Part B and Part D without triggering penalties.
When Garden Leave Doesn’t Count
But be careful: not all pay after leaving a job counts the same.
If you’re:
- Getting severance pay but no longer officially employed
- Off your employer’s group health plan
- Even still getting a paycheck but listed as terminated
Then Medicare does not consider you to have creditable coverage. That means your 63-day clock starts ticking to enroll in Part D before you face a late penalty.
How to Be Sure: Check Your Employment Status
Here’s the magic phrase Medicare is looking for: “active employee”.
It doesn’t matter if you’re working or not – what matters is whether your employer still considers you actively employed and is providing group health insurance.
If you’re unsure, don’t guess. Ask your HR department or check with your benefits administrator. Your contract or termination letter might be vague, but HR or legal can confirm your official status.
Quick Recap
- Garden leave = paid but not working, often still on benefits.
- If you’re still officially employed and have group health coverage, you likely have creditable coverage for Medicare.
- If you’re no longer an employee, even if you’re still being paid, you may face late penalties if you don’t enroll in Medicare on time.
- Always double-check your employment status with HR.
Final Tip
Medicare penalties can last for life, so it’s worth taking a few minutes to confirm your coverage status during any job transition. Knowing how garden leave affects your Medicare Part D and Part B timing can save you a lot of money and stress later on.
Have questions about your Medicare timeline? The Medicare Family is here to help. With over 40 years of experience, we offer expert advice and access to the best Medicare plans in your area at no cost to you. Schedule your FREE call today to get the support you need and make informed decisions about your health and future. We’re here for you every step of the way!
