Although the official retirement age in the United States ranges from 66 to 67 years old, Medicare eligibility for seniors begins at 65. While most people choose to retire at 66, others decide to stay in work past their retirement age or take a few years off and return to work later.
In fact, it is estimated that by 2026, at least 30% of individuals aged between 65 and 75 will be working. At least 11% of individuals aged 75 years and above will also be actively involved in work.
Whether it is a part-time job or you have gone back to fulltime employment, it is critical to understand how it affects your Medicare coverage and whether you need to do anything to ensure you are not penalized.
In this post, we discuss everything you need to know about how Medicare coverage changes if you go back to work. Keep reading to learn more.
Can I Keep Medicare Coverage If I Return to Work?
Let us start with the most obvious question you may be asking yourself. There is a high chance that you already have Medicare coverage if you are returning to work from retirement. Therefore, you may be wondering if you can still keep your Medicare coverage even with employee health coverage.
The simple answer is “yes.” Medicare is designed to work with other healthcare plans to ensure you receive the maximum benefits. If you choose to go back to work and want to keep your Medicare coverage while also receiving healthcare benefits from your current employer, you can do so.
The only thing you need to keep in mind is that one plan will act as the primary coverage while the other one will serve as secondary coverage. We shall discuss how these two operate below.
How Does Medicare Work Together with Your Employer Health Plan?
Typically, Original Medicare offers comprehensive medical coverage the same way most employer-provided health plans do. One type of coverage isn’t designed or intended to replace the other. Instead, they work together to ensure you enjoy the maximum benefits.
Medicare is designed to work in tandem with your employer-provided health plan to pay most, if not all, of your medical expenses. As mentioned earlier, when you have more than one plan, one will act as the primary coverage while the other one serves as the secondary coverage.
Whenever you receive medical services, your primary coverage pays first before the secondary coverage kicks in. if there is anything that your primary coverage didn’t pay for, your secondary coverage pays out next. In most cases, the secondary coverage will cover all of the remaining costs.
Medicare is generally your primary coverage if you work for a company with less than 20 employees. However, Medicare becomes your secondary coverage if your employer is part of a health plan with other companies having more than 20 employees.
Medicare becomes your secondary coverage if your employer has more than 20 employees. In this case, your group plan will serve as your primary coverage, and Medicare will only pay out only after your group plan has paid out its portion.
Can You Choose Employee Health Coverage Over Medicare?
Since Medicare is a government-funded program, it isn’t mandatory for one to enroll in it. So, if you are already receiving health insurance from your employer and have Medicare, you may find yourself in a situation where you are forced to choose only one plan.
Typically, the size of the company you work for will determine if you face penalties for forfeiting Medicare when you are fully eligible. The following rules will apply if you are forced to choose between Medicare and your employer-provided healthcare coverage:
- If the company has less than 20 employees, you must sign up for Medicare if you are eligible and keep it as your primary coverage. If you fail to do so, you will face a late enrolment penalty for Medicare Part B when you finally decide to sign up.
- If the company has more than 20 employees, you can choose to delay signing up for Medicare without the risk of paying late enrollment penalties later.
Typically, the late enrollment penalty for situations described above is a monthly premium increase of up to 10% for each 12-month period you failed to sign up for Medicare Part B when eligible.
For instance, let us assume you turn 65 and still receive employer healthcare benefits. Your employer is a relatively smaller company with fewer than 20 employees, and you decide to wait for 13 months before you sign up for Medicare Part B. In this case, you will face a lifetime penalty of 10% added to your Part B premium each month.
What If I’m Disabled and I Go Back to Work?
If you are receiving Social Security Disability Insurance and Medicare concurrently, you can continue with your Original Medicare coverage when going back to work for up to 8.5 years if you go off SSDI. Typically, you will receive a trial work period of nine months when you will still receive your SSDI benefits in full.
The primary objective of the trial work period is to help you gauge your ability to work. You don’t have to complete the nine months consecutively. As long as you complete your nine-month trial work period within a 60-month period and you continue to be disabled, then you can always go back to SSDI.
Once the nine months are over, the 8.5 years of Medicare coverage starts. The Medicare coverage will include premium-free Medicare Part A, but you will be expected to pay for your Part B premium. Once the 8.5 years end, you can continue enjoying Part A benefits by paying for a full premium.
The Bottom Line
Going back to work after enrolling in Medicare doesn’t change anything. You can choose to keep both Medicare and your group plan or drop Medicare in favor of your employer-provided healthcare plan. However, before you drop Medicare, take time to assess your situation and evaluate the possible implications of such a move.
The best thing to do is to keep both policies and use one as your primary coverage and the other as your secondary coverage.
Do you have any questions or concerns about Medicare? We are here to serve you! Contact us today to speak to one of our licensed agents.