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Medicare retirees returning to work may find they have choices when it comes to their health insurance.
That means, depending on the size of your new employer, you might be able to pick up the occupational health insurance plan and drop Medicare — and re-enroll later.
However, if you go this route, you need to know a lot of rules and deadlines. However, sticking with your Medicare coverage can result in higher premiums because of the extra income from your job (more on that below).
Basic Medicare is Part A (Hospital Coverage) and Part B (Outpatient Care). Some beneficiaries combine this with a standalone Part D prescription drug plan and a Medigap policy (which covers some costs that come with Medicare). Others choose to get Part A and B through a benefits plan (Part C), which usually includes Part D and some extras like dental care and vision.
Part A is premium-free as long as you have contributed to the program through payroll taxes for 10 years. For Part B, the standard monthly premium is $170.10 (for 2022) and Part D premiums average $33.
However, higher-income beneficiaries pay more for the B and D parts premiums, so it’s worth considering how ancillary income from a job might affect your pay. (See diagrams.)
If you work for a small employer, you must keep both Part A and Part B, even if you end up enrolling in the company’s health plan.
“If they go back to work for an employer with fewer than 20 employees, they want to keep both Part A and Part B because Medicare is primary and group insurance is secondary,” said Danielle Roberts, co-founder of insurance company Boomer Benefits.
It may also not make financial sense to choose the group plan over, say, a Medigap policy or an Advantage plan.
“Sometimes health insurance costs a lot more with a small employer,” Roberts said, adding that it’s worth checking the numbers before making a decision.
If the employer’s plan ends up being a good fit, you can opt out of your prescription plan if group protection is as good as or better than Part D (“creditable”) benefits.
At large companies
If you’re looking at a health plan for a company with 20 or more employees, there are a few potential issues to be aware of.
First, if work-based coverage comes with a Health Savings Account or HSA, you cannot contribute if you remain in any part of Medicare, including only Part A.
And canceling Part A just to use an HSA may not be practical.
“If you’ve already started receiving Social Security retirement benefits, you can’t opt out of Part A without paying back any Social Security benefits you’ve received to date,” Roberts said.
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If you want to take advantage of the employer health plan, you can drop Part B and save on those premiums. Make sure your employer plan is considered eligible coverage for Part D. Your insurance company should provide you with this information.
“These HSA plans might be fine for Part B but not for Part D,” said Elizabeth Gavino, founder of Lewin & Gavino and independent broker and general agent for Medicare plans.
If you have a Medigap policy, you must drop that as well.
Later, however, when you resumed Part B, you would be given a new six-month window to purchase an unsubscribed Medigap policy, Roberts said.
“It’s one of the few ways a person can get a second open sign-up window on Medigap,” she said.
There are other deadlines to consider if you eventually lose your employer insurance and want to switch to Medicare, and often requirements for proving you had qualifying insurance.
Once you stop working, you have an eight-month window to enroll or re-enroll in Part B. If you miss it, you could face a late registration penalty. For each full year that you should have enrolled but were not enrolled, you pay 10% of the standard Part B monthly contribution.
You have two months after your workplace plan ends to enroll in Part D, whether as a standalone plan or through an Advantage plan. If you miss this window, you may incur a late enrollment penalty. This amount is 1% of the base premium for each full month you could have covered but not.
Likewise, if you want an Advantage Plan, you only have two months from the end of your employment coverage to sign up for one. If you miss this, you will have to wait until the next enrollment period.
For those who may be in and out of the workforce and therefore in and out of workplace insurance, each time you lose coverage, the eight-month window begins anew, according to the Centers for Medicare & Medicaid Services.
In other words, if you move to another employer that offers qualifying coverage before this time frame is up, you’re safe. The next time you drop it, this window will restart. However, remember that for medication coverage, it is two months.
As for proof of insurance, once you no longer have it through work, the insurer should send you a letter detailing the dates you were insured under their plan.
To file for Part A and/or B, you must submit a form from your employer to the Social Security Administration confirming that you were insured, Roberts said.
https://www.cnbc.com/2022/05/16/unretiring-this-is-how-to-handle-your-medicare-coverage-.html ‘Tireless’? How to manage your Medicare coverage