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

Kimberly Lankford,

AARP

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En español

Published June 27, 2022

/ Updated April 10, 2024

If you or your spouse return to work after you’ve enrolled in Medicare and you sign up for the employer's health insurance plan, you may be able to temporarily drop Part B to save almost $2,100 in premiums in 2024 — 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 the employer. And when you or your spouse retire, you’ll need to reenroll in Part B within a certain time frame to avoid late enrollment penalties.

What should I consider before dropping 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.

You can drop Part B while you have coverage from your own or your spouse's current employer. But in order to avoid a permanent Part B late enrollment penalty, you'll need to reenroll in Part B while still working or during a special enrollment period that lasts for eight months after your job-based health insurance stops.

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

How do I disenroll from Medicare Part B?

You can’t withdraw online. If you decide to drop Part B, you’ll need to submit Form CMS-1763 to the Social Security Administration, which administers the Medicare program. You can submit the form in person at your local Social Security office or call SSA at 800-772-1213. You have up to eight months after that employer coverage ends to reenroll in Part B without a 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 Medigap supplement insurance policy. If you choose to stop Part B when you return to work, you’ll have to drop your Medigap policy.

When you’re 65 or older, you have a federal right to buy any Medigap policy in your area, regardless of preexisting medical conditions, within six months of enrolling in Part B. That’s a one-time guarantee.

But if you drop Part B because you get a new job and reenroll in Part B later, you typically lose 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, 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'll 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 drop Part B?

For Medicare Advantage, you also need to have both Part A and Part B, so you'll have to drop that coverage if you stop Part B. After you leave your job, you’ll have two months to get a Medicare Advantage plan. 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 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 $103,000 or $206,000 if married filing jointly, you’ll have to pay higher premiums.

In 2024, the standard Part B premium is $174.70 a month, but people who are subject to this income-related monthly adjustment amount (IRMAA) have to pay $244.60 to $594.00 a month, depending on their income. They’ll also have to pay a monthly surcharge that ranges from $12.90 to $81.00 on top of their Part D premiums.

These surcharges are based on your most recent income tax return on file. So 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.

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Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger’s Personal Finance and has written for The Washington Post and Boston Globe. She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.