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Returning to the workforce with Medicare coverage

Medicare retirees returning to the workforce may find that they have options for their health coverage.

That is, depending on the size of your new employer, you may be able to pick up your company’s health plan and leave Medicare and then re-enroll later.

If you do this route, however, there are many rules and deadlines to know. However, continuing with your Medicare coverage may result in higher premiums due to the extra income from your job (more information below).

Basic Medicare is Part A (hospital coverage) and Part B (outpatient care). Some beneficiaries combine this with a stand-alone Part D prescription drug plan and a Medigap policy (which covers some costs that include basic Medicare). Others choose to get parts A and B through a benefit plan (part C), which usually includes part D and some extras like dentistry and vision.

Part A does not include any premiums as long as you have a 10-year track record of contributing to the program through payroll taxes. For Part B, the standard monthly premium is $ 170.10 (for 2022) and Part D premiums average $ 33.

However, higher income recipients pay more for Part B and D premiums. This means that it is worth considering how the extra income of a job can affect what you pay. (See graphics.)

If you are working for a small business owner, you will need to keep parts A and B even if you end up enrolling in the company’s health plan.

“If they return to work for an employer with less than 20 employees, they will want to keep both Part A and Part B because Medicare is primary and group coverage is secondary,” said Danielle Roberts, co-founder of Boomer Insurance Company. . Benefits.

It may also not make financial sense to choose the group plan instead of, for example, a Medigap policy or an Advantage Plan.

“Sometimes, health coverage for a small business costs a lot more,” Roberts said, adding that it’s worth analyzing the numbers before making a determination.

If the employer’s plan fits well, you can unsubscribe from your prescription plan if the group’s coverage is equal to or better than the (“creditable”) Part D benefits.

If you are looking for a health plan in a company with 20 or more employees, consider some possible drawbacks.

First, if your work coverage includes a health savings account, or HSA, you can’t contribute if you continue with any part of Medicare, including only part A.

And, canceling Part A just to take advantage of an HSA may not be practical.

“If they have already started receiving Social Security retirement benefits, they cannot cancel Part A without having to return all the benefits they have received from Social Security so far,” Roberts said.

If you want to use the employer health plan, you can leave Part B and save on these premiums. Be sure to confirm that your employer plan would be considered credible 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 an independent agent and general agent for Medicare plans.

Also, if you have a Medigap policy, you should also opt out.

However, in the future, when you pick up Part B again, you’ll have a new six-month window to buy an unsubscribed Medigap policy, Roberts said.

“It’s one of the few ways a person can get a second registration window open in Medigap,” he said.

There are other deadlines to consider when you finally lose your employer coverage and want to switch to Medicare and often requirements to prove you have eligible coverage.

Once you stop working, you will get an eight-month period to enroll or re-enroll in Part B. You could face a late enrollment penalty if you do not miss it. For each full year that you should have signed up but are not, you will pay 10% of the standard Part B monthly premium.

To enroll in Part D, either as a stand-alone plan or through an Advantage plan, you would have two months after your work plan ends. If you miss this window, you may face a late registration penalty. This amount is 1% of the base premium for each full month that you may have had coverage for but did not.

These HSA plans may be fine for Part B, but not for Part D.

Similarly, if you want an Advantage Plan, you only have two months from the end of your employment coverage to subscribe to one. If you lose it, you will have to wait until the next enrollment period.

For those who can get in and out of the workforce and therefore in and out of workplace insurance – every time you lose coverage, the eight-month window restarts, according to Service Centers Medicare and Medicaid.

In other words, if you go to another employer that offers qualified coverage before this time period expires, be clear. The next time you release it, this window will restart. However, remember that for drug coverage, it is two months.

As for proof of coverage: When you no longer have it through work, the insurer should mail you a letter showing the dates you were covered in your plan.

To register for Parts A and / or B, you must provide the Social Security Administration with a form from your employer certifying that you are covered, Roberts said.

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