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What happens to my Medicare coverage if I return to work?

If you or your spouse return to work after you’ve enrolled in Medicare and the employer is offering health insurance, you may be able to opt out of Part B to avoid having to pay premiums for both Medicare and your employer’s health insurance.

Potentially, you could save at least $2,000 in 2023 — or more depending on your income. You may be able to save more if you can cancel your Medicare Advantage plan, Part D prescription drug plan or other additional health-related insurance you purchased. But not everyone has this option — it typically depends on the size of your employer. And when you retire, you’ll need to reenroll in Part B within a certain time frame to avoid late enrollment penalties.

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Should I drop Medicare if my new job has health insurance?

Before deciding whether or not to withdraw from Medicare Part B, first find out whether Medicare is primary or secondary to your employer coverage. That will determine whether dropping Part B could leave you with coverage gaps.

At a large employer. If you work for a company with 20 or more employees, the employer’s coverage is primary and Medicare is secondary. You can disenroll from Medicare Part B and use your employer’s coverage instead.

You generally can’t drop Medicare Part A unless you’re paying a premium for it. For people who’ve paid Medicare taxes for 40 quarters — 10 years of work that don’t have to be consecutive — Part A has no premiums.

But to avoid a permanent Part B late enrollment penalty, when you leave, lose or retire from your new job, you must then reenroll in Medicare Part B while you’re still on the job or during a special enrollment period that lasts for eight months after your job-based private health insurance stops.

At a small business. The coverage rules are different for smaller companies. For most places with fewer than 20 employees, Medicare becomes your primary coverage at age 65 and the employer plan provides secondary coverage.

This means Medicare settles your medical bills first, and your private group plan pays only for services it covers that Medicare doesn’t. If you drop Part B in this situation, you will be left with big coverage gaps.

If you work for a small employer, ask whether you’re required to keep Medicare coverage if you’re 65 or older. That’s the most common arrangement. If not, ask your employer to provide the decision in writing.

How do I disenroll from Medicare Part B?

You can’t withdraw online. If your employer’s coverage is primary and you decide to drop Part B, you’ll need to submit Form CMS-1763 to the Social Security Administration. That’s because the agency processes both Medicare enrollments and cancellations for the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program.

You can submit the form in person at your local Social Security office. You can also call the Social Security Administration at 800-772-1213 or contact your local Social Security office to request the form. Social Security will send the form and a return envelope so it can be returned to the appropriate location.

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Two witnesses who know you and are willing to supply their names and addresses must see you sign it. You can’t submit the form electronically; it’s processed manually.

You’ll want Part B back eventually. To restore Part B when your new employer’s coverage ends, you’ll need to sign up again for Part B no later than eight months after your on-the-job insurance ends or you’ll face a permanent late enrollment penalty.

If you miss that special enrollment period, you’ll need to wait to reenroll until the next general enrollment period, Jan. 1 to March 31. Your coverage will start the first of the month after the month you enroll.

What happens to Medigap when I return to work?

The rules are tricky. You must have Medicare Part A and Part B to have a Medicare supplement insurance policy, better known as Medigap. If you choose to stop Part B when you return to work, you’ll have to drop your Medigap policy, too.

Be aware that you may have a difficult time getting Medigap coverage again when you reenroll in Medicare after you leave your job. When you’re 65 or older, you have a federal right to buy any Medigap policy in your area, regardless of preexisting conditions, within six months of enrolling in Part B. That’s a one-time guarantee.

If you drop Part B because you get a new job and reenroll in Part B later, you generally don’t get a new Medigap guaranteed issue period. That means insurers could deny coverage or charge more if you have preexisting conditions. Some states have guaranteed issue rules that differ from federal regulations.

Small businesses. If you have health insurance from your job that’s secondary to Medicare, which is often the case for businesses with fewer than 20 employees, you may want to drop your Medigap coverage even though you aren’t dropping Medicare. Your employer’s coverage will fill in the gaps.

After you leave employment and lose that coverage, you will have 63 days to select a Medigap policy and have guaranteed issue rights. This can happen only if your employer’s coverage is secondary to Medicare.

What happens to MA or Part D if I work?

For Medicare Advantage, you also need to have both Part A and Part B, so you must drop that coverage if you stop Part B. After you leave your job, you’ll have two months to get a Medicare Advantage plan if you want a private plan rather than original Medicare. Otherwise, you can sign up during open enrollment each year from Oct. 15 to Dec. 7.

For Part D prescription coverage, you can keep coverage as long as you have either Part A or Part B. But you may not need that coverage if your employer offers prescription drug coverage that’s considered as good or better than Medicare’s, called “creditable coverage.” You won’t pay a late enrollment penalty as long as you sign up for Part D within two months of losing that coverage.

Keep in mind

When you return to work, be mindful of the high-income surcharge you could face if you keep Medicare Part B or Part D. If you’re single and your modified adjusted gross income is more than $97,000 or $194,000 if married filing jointly, you’ll have to pay higher premiums.

In 2023, the standard Part B premium is $164.90 a month, but people who are subject to this income-related monthly adjustment amount (IRMAA) have to pay $230.80 to $560.50 a month, depending on their income. They’ll also have to pay a monthly surcharge that ranges from $12.20 to $76.40 on top of their Part D premiums.

These high-income surcharges are based on your most recent income tax return on file — usually 2021 income for 2023 premiums, for example. While going back to work might not affect your premiums immediately, it could if you continue to work for several years.

After you retire or experience certain other life-changing events, you can ask the Social Security Administration, which handles these surcharges, to use your more recent income to reduce or eliminate the surcharge.

Updated March 3, 2023

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