Key Takeaways

• If you continue working past 65 and have employer-sponsored health insurance, you may be able to delay certain parts of Medicare without penalties.

• Understanding the coordination of benefits between Medicare and your employer plan ensures you avoid unnecessary costs and coverage gaps.

Turning 65 Doesn’t Mean You Have to Enroll Right Away

Many people assume that once they turn 65, they must enroll in Medicare immediately. However, if you’re still working and have health coverage through your job, your Medicare enrollment options look a little different. Your choices will depend on factors like your employer’s size and whether your current plan offers enough coverage.

Employer-Sponsored Insurance and Medicare: How They Work Together

If you work for a company with 20 or more employees, your employer-sponsored health plan remains your primary insurance. This means:

• You can delay enrolling in Medicare Part B (medical insurance) without facing late penalties.

• You may still want to enroll in Medicare Part A (hospital insurance) since it’s usually premium-free if you or your spouse paid Medicare taxes for at least 10 years.

• Your employer coverage continues as usual, and Medicare can act as secondary insurance when you eventually enroll.

For companies with fewer than 20 employees, Medicare becomes your primary insurance. This means:

• You’ll likely need to enroll in Medicare Part A and Part B when you turn 65.

• Your employer plan may not cover costs unless you have Medicare, leading to potential gaps in coverage.

Should You Enroll in Medicare Part A?

Even if you keep working, many people sign up for Medicare Part A when they turn 65 because it’s premium-free for most. However, there’s a key exception:

• If you have a Health Savings Account (HSA) through your employer, enrolling in Medicare will prevent you from making tax-free contributions to the HSA.

• If you plan to continue contributing to an HSA, delaying Medicare enrollment entirely is the better option.

When Should You Enroll in Medicare Part B?

Medicare Part B comes with a monthly premium, so if your employer insurance is sufficient, you might choose to delay enrollment. However, you’ll need to sign up for Part B within eight months of losing your employer coverage to avoid late penalties.

If you don’t enroll in Part B during this Special Enrollment Period (SEP), you may have to wait until the next General Enrollment Period (January 1 – March 31) and pay lifelong penalties for late enrollment.

Prescription Drug Coverage: Medicare Part D or Employer Plan?

You don’t need to sign up for Medicare Part D (prescription drug coverage) if your employer plan includes creditable drug coverage, meaning it meets Medicare’s standards. However, if your employer plan doesn’t meet these standards, you’ll need to enroll in a Medicare Part D plan to avoid late penalties.

Each year, your employer must inform you whether your drug coverage is creditable. Keep this notice in case you decide to enroll in Part D later.

What If You Retire and Lose Employer Coverage?

If you decide to retire after 65 and lose your job-based insurance, you must act quickly to enroll in Medicare to avoid penalties. Your Special Enrollment Period (SEP) lasts eight months from the date your employer coverage ends.

During this time, you can:

• Sign up for Medicare Part B (if you delayed it previously).

• Enroll in a Medicare Part D plan for prescription drug coverage.

• Consider additional coverage options, such as Medigap or Medicare Advantage, depending on your needs.

COBRA and Medicare: What You Need to Know

If you’re offered COBRA coverage after leaving your job, be aware that:

• COBRA is not considered employer coverage for Medicare purposes.

• You must enroll in Medicare first before signing up for COBRA, or you could face coverage gaps and penalties.

• If you delay Medicare enrollment while using COBRA, you could be forced to wait for the General Enrollment Period and pay higher premiums.

What About Spouses? Medicare Enrollment Considerations

If your spouse is covered under your employer’s health plan, they may need to find alternative coverage when you retire. Since Medicare doesn’t cover dependents, your spouse may need to:

• Enroll in their own employer-sponsored plan (if available).

• Sign up for COBRA coverage for up to 36 months after you leave your job.

• Purchase individual health insurance until they become eligible for Medicare at 65.

Planning for Medicare While Working: A Step-by-Step Guide

If you’re still working at 65, follow these steps to ensure a smooth Medicare transition:

1. Review Your Employer Coverage – Check whether your plan is primary or secondary to Medicare and if it includes creditable drug coverage.

2. Decide on Medicare Part A Enrollment – If you have an HSA, delaying Part A might be necessary.

3. Determine When to Enroll in Part B – If your employer has fewer than 20 employees, you may need to enroll immediately.

4. Assess Your Drug Coverage – Find out if your employer plan meets Medicare’s creditable coverage standards.

5. Know Your Enrollment Deadlines – If you delay Medicare, sign up within eight months of losing employer coverage to avoid penalties.

Key Medicare Enrollment Periods to Remember

Understanding when you can enroll in Medicare ensures you avoid penalties and coverage gaps. Here are the major enrollment periods:

• Initial Enrollment Period (IEP): Begins three months before your 65th birthday and ends three months after.

• Special Enrollment Period (SEP): Available if you delay Medicare due to employer coverage; lasts eight months after coverage ends.

• General Enrollment Period (GEP): Runs January 1 – March 31 each year for those who missed previous opportunities; coverage starts July 1.

Making the Right Choice for Your Medicare Strategy

Continuing to work past 65 gives you more flexibility with Medicare, but it’s important to understand your options. If you have employer-sponsored coverage, you may be able to delay certain Medicare parts while avoiding penalties. However, staying informed about deadlines and coordinating your coverage properly ensures you don’t face unnecessary expenses.

Before making any decisions, review your employer’s plan, compare costs, and plan ahead for a smooth transition to Medicare when you’re ready.