By: Sarah O´Brien
It’s not uncommon to discover that retirement isn’t the ideal existence you thought it would be.
If you are a retiree on Medicare who’s rejoining the workforce, be aware that you might have choices when it comes to your health-care coverage. Depending on where you work, you may be able to drop Medicare in favor of an employer health plan and then re-enroll down the road.
However, there are a lot of rules and deadlines to know if you go this route. On the other hand, keeping your Medicare coverage could mean paying more for premiums due to the extra income from your new job (more on that below).
Basic Medicare consists of Part A (hospital coverage) and Part B (outpatient care). Some beneficiaries pair that with a standalone Part D prescription drug plan and a Medigap policy (which covers some costs that come with basic Medicare). Others choose to get Parts A and B delivered through an Advantage Plan (Part C), which usually includes Part D.
Part A comes with no premium as long as you have a 10-year history of contributing to the program through payroll taxes. For 2022, Part B comes with a standard monthly premium of $170.10 and Part D premiums will average $33 this year.
However, higher-income beneficiaries pay more for Parts B and D premiums. This means it’s worth considering how extra income from a job could affect what you pay. (See charts.)
If you’re considering working for a small employer, you’d need to keep both Parts A and B even if you end up enrolling in the firm’s health plan.
“If they go back to work for an employer with less than 20 employees, they’ll want to keep both Part A and B because Medicare is primary and the group coverage is secondary,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.
It also may not make financial sense to choose the group plan instead of, say, a Medigap policy or an Advantage Plan.
“Sometimes health coverage at a small employer costs considerably more,” Roberts said, adding that it’s worth crunching the numbers before making a determination.
If the employer’s plan ends up being a good fit, you can disenroll from your prescription plan if the group coverage is as good as or better than (“creditable”) Part D benefits.