By Mark Miller

(Reuters) – The Great Retirement has become the Great Return. A U.S. Employment Report for March was released earlier in the month and showed an increase in older workers returning to the workforce. It is due to the large number of job opportunities and the decreased health risk associated with COVID-19.

Millions of seniors were forced into early retirement by the pandemic, which caused many to quit saving and file for Social Security benefits earlier than expected. These workers lost out on the possibility of increasing their monthly benefits through delayed claims. 

Longer work is an excellent way to boost your income when you retire. But if you count yourself among the “back to work” crowd, your retirement plan may need an adjustment – especially enrollment in Social Security and Medicare.

Do-OverS in Social Security

There are two do-over options available for those who have claimed Social Security, but they have returned to work.

Your application can be withdrawn within twelve months of the start of benefits. But that might not make sense as you will need to return all benefits up until that point.

Second, you can suspend retirement benefits https:// until Full Retirement Age or later in order to get delayed retirement credits. Social Security permits you to terminate benefits at your FRA (66) and for a period of time, which is typically a couple months. After reaching your FRA, you can resume the accumulation of deferred credits until 70. This can only be done once but it could increase your benefits significantly down the line. 

A formula linked to your FRA determines the monthly Social Security Benefit. The point when you are eligible to claim 100% of the earned benefit is this. Although you may claim retirement benefits at any age up to age 62 (or earlier if your full retirement age is reached), your annual benefit could be affected by as high as 6.7%. However, filing after the FRA will result in an 8% increase per 12 months up to age 70. 

A suspension of benefits at FRA is not the same as a suspension. The delayed credits are calculated using your reduced benefits. However, this strategy could still prove to be extremely valuable.

“This can add up to tens of thousands of additional dollars per year,” said William Meyer, co-founder of Social Security Solutions, which offers software aimed at helping retirees make optimal claiming decisions. “It also creates a longevity hedge if you live longer than you expect.”

A reminder about Social Security. If you have income from your work or Social Security prior to your FRA your benefits are reduced by the Retirement Earnings test. This withholds one dollar of your wages income and two dollars of your benefit. The test will be applied this year to income above $19,560. These benefits will not be lost. Social Security will credit your withheld benefits with your monthly benefit when you retire at full retirement age.

The Social Security Administration has posted a calculator https://www.ssa.gov/OACT/COLA/RTeffect.htmlthat you can use to determine any effect of the test on your benefits. 

MEDICARE: WATCH OUT FOR THE PENALTIES

You might be able to switch back to your employer’s coverage, if you are 65 or older and return to work.

Medicare will require that you enroll during the initial enrollment period of seven months. This includes three months preceding, three months after, and three months thereafter your 65th birthday. Late-enrollment penalties are imposed in the form higher premiums for your entire life if you miss that window.

There really is only one important exception to these rules: you can delay enrollment if you are still working beyond age 65 and have insurance through your employer, or if you receive insurance through your spouse’s employer. 

Late-enrollment penalties for Part B are equal to 10% of standard Part B premiums for every 12 month delay. Although they are not as severe, there are late-enrollment sanctions for Part D’s prescription drug program.

You could be subject to penalties if you don’t enroll in Medicare. It is important that you understand whether your employer offers an exemption. There is also the possibility of delay in your coverage once you return to Medicare depending on when you enroll.

There are no penalties for delaying if you have insurance that is derived from active employment. If you are employed by a small company with 20 employees or less, you must remain enrolled to make sure you have sufficient coverage. If you are 65 or older, Medicare will become the primary payer. To avoid paying large out-of pocket expenses, it is important to be enrolled in Medicare.

You can also choose to compare your employer’s insurance options with Medicare, so you can decide which option is best for you. “It’s a very personal choice,” said Casey Schwarz, senior counsel at the Medicare Rights Center. “But I’d start by comparing how much you’re paying in Medicare premiums and out-of-pocket costs.”

It is possible to activate Medicare Income-Related Modular Adjustment Amounts for (IRMAA) if you receive wage income or Social Security. For enrollees earning more than certain income levels, these surcharges are added to Medicare Part A and Part D premiums. They can substantially increase Medicare cost.

You can choose from five surcharge brackets based on your modified adjusted gross. 

The first bracket is now available to individuals with income over $91,000. Your monthly Part B premium would be $238.10 instead of $170.10. This year, the Part D surcharge for those who fall into the first bracket is $12.40.

SAVINGS: PLAY CAPTURE-UP

Resuming work will open the door to resuming your late-in retirement savings. You can make a contribution of up to $27,000 this year to a 401k if you are older than 50. Your IRA contribution limit, however, is $7,000.

This column is written by a columnist from Reuters.