Does Medicare Coverage Change If You Return to Work?

Today, it’s not uncommon for people who leave the workforce around Medicare eligibility age (age 65) to return to work later on. In fact, it’s estimated that by 2026 about 30 percent of people ages 65 through 75, and 11 percent of people 75 and older, will be working.¹ Maybe it’s a passionate side-gig, a part-time job or you’ve gone back full-time. In any case, when you go back to work, what does that mean for your Medicare coverage?

Can You Take Employer Coverage Again When On Medicare?

If you return to work for an employer who offers health insurance, you can take it. You are allowed to have both Medicare and employer coverage, and you can use them together. One will act as primary coverage and one will act as secondary.

The only thing to keep in mind is that when you have Medicare and an employer plan, you cannot contribute to a health savings account (HSA) if it’s offered.

Do I Need to Keep Medicare If Returning to Work?

Well it depends. If you’re going back to work and can get employer health coverage that is considered acceptable as primary coverage, you are allowed to drop Medicare and re-enroll again without penalties. If you drop Medicare and don’t have creditable employer coverage, you’ll face penalties when getting Medicare back.

Before you decide to drop any part of Medicare, there are some things you’ll want to think about, especially as some choices could end up being costly.

• Pre-Existing Conditions: If you decide to drop Medicare Part B, you’ll also have to drop a Medigap plan if you have one. This could make it difficult to enroll in another later on as your pre-existing health conditions will be considered when applying.
• Health Savings Accounts (HSAs): If you decide to drop Part A—say you wanted to do so to contribute to an HSA from your new employer – if you do, you could end up having to repay the government for medical services Medicare covered as well as repaying any Social Security benefits money you were getting.
• Premium Payments: If you are currently paying premiums for Part A, you cannot disenroll from Part B without also disenrolling from Part A.²

Additionally, should you decide to disenroll from Medicare, you’ll likely have to talk with Social Security directly – either in-person or on the phone. The Administration requires that you consult with one of their officials while you fill out the Part B disenrollment form.

Rules for Re-Enrolling in Medicare When Working After 65

There are rules for re-enrolling in Medicare after you’ve dropped it for an employer-sponsored health plan. You’ll have an 8-month Special Enrollment Period in which to re-enroll in Medicare Part A and Part B. If you miss this window, you’ll have to wait to enroll in the Medicare General Enrollment Period (January 1 – March 31) and you could face late enrollment penalties if you end up going too long without creditable coverage.

NOTE: While you have eight months for Parts A & B, you only get two months after losing the employer coverage or leaving work to re-enroll in a Medicare Part D prescription drug plan or a Medicare Advantage (Part C) plan.  If you enroll later, you’ll face late enrollment penalties for Part D.

Finally, if you wish to re-enroll in a Medigap plan, you’ll be able to do so any time after re-enrolling in Parts A & B.

Learn more about the Special Enrollment Period for people working past 65 in this article.

There are a lot of things to consider when it comes to Medicare and returning to work. Take your time thinking through your options. Any decision is right so long as it’s what’s best for your health and lifestyle.

¹ https://www.cnbc.com/2019/08/12/dropping-medicare-for-employer-health-coverage-may-trip-you-up.html

² https://www.cnbc.com/2019/08/12/dropping-medicare-for-employer-health-coverage-may-trip-you-up.html