Retirement Guidance: Can You Remain on Medicare If You Return to Work?
Written by
Josephine Nesbit
Edited by
Daria Uhlig
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It’s not uncommon for people to leave the workforce and return later on. But what does this mean for your Medicare coverage? If your employer offers health insurance, you may be able to take it and remain on Medicare. One will act as primary coverage, while the other will act as secondary coverage, according to UnitedHealthcare. However, the size of the employer offering health coverage matters.
At companies with under 20 employees, workers generally need to be enrolled in Medicare once they reach the age of 65 to avoid paying extra later. “If they go back to work for an employer with less than 20 employees, they’ll want to keep both Part A (hospital care) and B (outpatient care) because Medicare is primary and the group coverage is secondary,” Danielle Roberts, co-founder of insurance firm Boomer Benefits, told CNBC.
At companies with 20 employees or more, the rules change. In this case, the employer-provided group health plan is primary and Medicare coverage is secondary. If employer coverage comes with a health savings account, you cannot contribute to it if you remain on any part of Medicare, including just Part A.
Canceling Part A to take advantage of the HSA might not make much sense, either. “If they’ve already begun taking Social Security retirement benefits, they cannot cancel Part A without having to pay back all the benefits they received from Social Security so far,” Roberts added. However, you may use funds from an HSA opened before you enrolled in Medicare, and you can even use the funds to pay your Medicare premiums, according to AARP.
If you work for an employer with 20 or more employees, you must keep Part A and Part B. If working for a small employer, on the other hand, you could potentially save money by dropping Part B and using your employer’s health plan, but you first need to check that your employer plan would be considered creditable coverage for Part D.
Additionally, if you have a Medigap policy, you’ll need to drop it. However, Roberts explained that when you pick up Part B again, you get a six-month open-enrollment window to purchase a Medigap policy without underwriting.
If you do decide to drop Medicare, your employer health coverage must be considered acceptable as primary coverage. If not, you could face penalties once you decide to re-enroll in Medicare, according to UnitedHealthcare.
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Daria Uhlig contributed to the reporting for this article.
