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What happens to my Medicare if I return to work and join my employer’s health plan?

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 so you don’t have to pay premiums for both Medicare and your employer’s health insurance.

Potentially, you could save at least $2,000 in 2022. And 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 may be buying.

But not everyone has this option — it generally depends on the size of your employer. And when you retire, you will need to reenroll in Part B within a certain time to avoid late-enrollment penalties.

Can I stop Medicare if my new job offers health insurance?

Before deciding whether or not to disenroll 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 Part A unless you have to pay a premium for it. For people who have paid Medicare taxes for 40 quarters — 10 years of work that don’t have to be consecutive — Part A is free anyway.

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

How do I disenroll from Medicare Part B?

You can’t disenroll online. If your employer’s coverage is primary and you decide to drop Part B, you 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. Or call the Social Security Administration at 800-772-1213 to request the form, and you’ll be told where to send it.

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, and it is processed manually.

You’ll want Part B back eventually. To restore Part B when your new employer’s coverage ends, you’ll have to take action. You’ll need to sign up again for Part B no later than eight months after your on-the-job insurance ends.

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. But if you don’t act quickly, you may have to pay a permanent late-enrollment penalty.

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. So if you disenroll from Part B when you return to work, you’ll have to drop your Medigap policy too.

But 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. Yet that is 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, and insurers could deny coverage or charge more if you have preexisting conditions. Some states have guaranteed issue rules different from the federal regulations.

Other rules at small businesses. If you have health insurance from your job that is secondary to Medicare, like many people who go to work for a business 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 get a Medigap policy with guaranteed issue rights. But this can happen only if your employer’s coverage is secondary to Medicare.

What happens to Medicare Advantage 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.

Bottom line: If you end up dropping either the Medicare Advantage all-in-one alternative to original Medicare or the Part D drug coverage that works with traditional Medicare, you’ll have two months after your job-based insurance ends to reenroll.

Keep in mind

When you return to work, be mindful of the high-income surcharge if you keep Medicare Part B or Part D. If you’re single and your modified adjusted gross income is more than $91,000 or $182,000 if married filing jointly, you’ll have to pay higher premiums.

In 2022, the standard Part B premium is $170.10 a month, but people who are subject to this income-related monthly adjustment amount (IRMAA) have to pay from $238.20 to $578.30 a month, depending on their income. They’ll also have to pay a monthly surcharge of $12.40 to $77.90 in addition to their Part D premiums.

These high-income surcharges are based on your most recent income tax return on file — usually 2020 income for 2022 premiums, for example. So going back to work might not affect your premiums immediately, but 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 June 27, 2022



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