If you retired and signed up for Medicare but you’ve decided to re-enter the job market, you may be able to drop your Medicare coverage for an employer health plan and then re-enroll in Medicare when you retire a second time. If this is what you want to do, be aware that there are several rules and deadlines that you will need to follow. For one thing, the rules are different depending on the size of the company you will be working for.
If you have questions about Medicare coverage as you head toward retirement or during a return to the workforce, our Medicare agents are here to help. Contact us for a free meeting today.
How to Handle Medicare Coverage If You Decide to Return to Work after Retiring
The way you handle your Medicare coverage upon your return to the workforce will at least partly depend on the size of the company you will be working for.
For health coverage purposes, companies are classified as “small” when they have 20 or less employees. If you are going back to work for a small employer, you will need to stay enrolled in Medicare Part A and Part B. The firm’s group health coverage would then act as secondary coverage to fill in some of the gaps left by Original Medicare. Choosing group coverage is essentially an alternative to a Medicare supplement plan or Medicare Advantage plan so do the math and decide which one is more affordable and/or comes with the most benefits. If the group plan includes creditable drug coverage, then you could also dis-enroll in your Part D prescription drug plan.
If you’re going to work for a large company with 20 or more employees, you will not be required to hold onto your Part A and Part B coverage but there are some things to be aware of:
If your new workplace offers a health savings account (HSA), you will not be allowed to contribute to it if you stay enrolled in any part of Medicare, including just Part A.
Canceling Part A to enroll in a company HSA isn’t likely a good option if you have already started receiving your Social Security retirement benefits because you’d have to pay back all the benefits you’ve received from Social Security so far.
On the bright side, you could drop Part B – and potentially Part D - to save on your monthly premiums because the group coverage would replace your medical coverage and prescription drug coverage (just check with your insurer to make sure the prescription drug coverage is creditable). If you choose an employee health plan, you would need to drop your Medigap policy but you would get a new six-month window to buy a Medigap policy without underwriting requirements once you go back into retirement.
Other things to be aware when you’re ready to switch back to Medicare after moving to employer coverage:
You may be required to show proof to the Social Security Administration that you had qualifying coverage before signing back up for Medicare. Your insurer should mail you a letter showing the dates you were covered in its plan that can be used as proof of coverage.
Once you stop working and retire for the second time, you will have an eight-month enrollment window to re-enroll in Medicare Part B. If you miss this window, you could be assessed a late-enrollment penalty of 10% of the monthly Part B standard premium for each full year that you were supposed to be enrolled in Part B but weren’t.
Once you stop working and go back into retirement, you will have two months to sign up for Part D. If you fail to sign up for Medicare prescription drug benefits within this time frame, you could be forced to pay a late enrollment penalty of 1% of the base premium for each full month that you could have had coverage but didn’t.
You have two months to sign up for a Medicare Advantage plan after your group health coverage ends. If this window is missed, then you would need to wait until the next Annual Enrollment Period (AEP), October 15 – December 7 each year.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.