Thanks to the type of work I do, I am often asked questions about Medicare during the course of casual conversation. I always hesitate to reply, since given all the nuances and situation-specific considerations, there is no single answer that applies across the board. So, I often start my response with, “It depends.
”Nowhere is “it depends” more appropriate than on the question of whether or not and how to disenroll from Medicare coverage if an individual has decided to rejoin the workforce. However, here are some things to understand and think about…
Can I change my Medicare coverage if I go back to work?
The answer is yes. But the key question is, “Should you?”
Before moving forward, you’ll want to embark on a detailed analysis, and you’ll want to do this early on in the job recruitment process. Early on because the outcome of the analysis may be very helpful during a negotiation for benefits and/or some other form of compensation if you choose not to take advantage of the company’s health insurance offering. Here are things to consider:
- What is the complete cost for you now under Medicare, including your premiums and its associated products, your Income Related Monthly Adjustment Amount (IRMAA) (if you are subject to one), and your projected out-of-pocket cost for both healthcare and prescription drugs?
- What benefits will the new insurance include and what restrictions will it impose on your access and choices?
- When newly employed, what will be your contribution toward the premium?
- What is the deductible and the out-of-pocket maximum for the new employer plan?
- Do you have additional family members who could avail themselves of the employer coverage and, if so, how will the cost, benefits, and requirements impact them and compare to their current experience?
- Will I be participating in a high-deductible health insurance product with a Health Savings Account (HSA) with my new employer? (If so, there may be tax implications to staying enrolled in Medicare Part A.)
- How soon can my new coverage begin?
- How long will it take to disenroll from Medicare? (I have seen it take weeks to months.)
- How long do I plan to stay gainfully employed and covered under my new employer plan? (Be honest with yourself about this one.)
Keep in mind that while you may reenroll in Medicare without penalty if your employment status changes (since you will be subject to a Special Enrollment Period (SEP)), you should begin this process at least three months before you want Medicare to start again, as there are many nuances involved. The reenrollment process itself can take up to 60 days once initiated.
How do I disenroll?
If you decide to take this step, you’ll now want to consider:
- How do I do it?
- Should I disenroll in both Parts A and B, or just one or the other?
- How much time will all of this take?
The next step is to do your homework, complete the disenrollment form to the best of your ability, and prepare any supporting documentation that may be required or helpful to explain what you plan to do. But — do not send anything anywhere until you’ve spoken to a representative from Social Security.
Call your local Social Security office (or stop in now that offices have reopened), describe what you are attempting to do and why, and rely on the knowledge of the Social Security representative to help you accomplish your task. Ask for timeframes within which outcomes should be determined and mark your calendar to follow up with a phone call or another in-person visit if deadlines are not met.
Be sure to document names, dates, and outcomes of any interactions and verify that your interaction was documented within the Social Security System.
Every Situation is Different
One of our clients retired and paid a significant amount for Medicare because she was subject to a high IRMAA. Her spouse and two dependent children were on an open market health insurance plan that was expensive, had a high deductible, and limited provider networks.
The new employer was subsidizing 75% of a Preferred Provider Organization (PPO) plan that afforded greater choice and out-of-network benefits. For this family, the amount of administrative work it took to disenroll from Medicare was well worth it.
A second client and his wife were paying much less while on Medicare than the premium contribution would have been for them on the employer plan (they were not subject to an IRMAA). They had in place a Medicare Supplement Plan and a Medicare Part D prescription drug plan that afforded them choice, flexibility, and predictable costs.
Further, they had the same coverage all over the country, no need to designate a primary care physician, no required referrals, and limited out-of-pocket cost. So they stayed on Medicare and the man was able to negotiate receiving a stipend towards his health insurance cost from his new employer.
Health insurance may not be the most exciting topic to think about, but it is certainly important to our lives. Whether you are retiring and going on Medicare for the first time, or considering a change in status as you reenter the workforce, a thorough analysis is key.
Every situation is different, which is why… it depends!