Medicare and Working Past 65

Medicare and Working Past 65

If you plan to work past age 65 you will want to plan carefully around signing up for Medicare to avoid costly penalties.  Here are some points to consider when deciding to sign up for Medicare at age 65 or delay until you have retired.

Medicare Enrollment

It’s important to sign up for Medicare coverage when you are first eligible unless you have other coverage similar in value to Medicare (like from an employer).

Medicare enrollment generally begins three months before your 65th birthday and extends for three months after. However, if you’re still working and covered by your employer’s health insurance, you may qualify for a Special Enrollment Period (SEP). This period allows you to enroll in Medicare without penalty for up to 8 months after your employment ends or your employer coverage stops, whichever is sooner.

If you don’t sign up for Medicare during the initial or special enrollment period, you may have to pay a late enrollment penalty that is tacked on to your monthly Medicare premium and can last for many years, even for your lifetime. Please review the information below and refer to the flowchart to determine if you can defer Medicare without penalties.

Primary vs. Secondary Payer

The coordination between your employer’s insurance and Medicare depends on the size of your company. For businesses with 20 or more employees, your employer coverage usually remains primary, while Medicare acts as secondary insurance (if you sign up for it). For smaller companies, Medicare may become the primary payer which means you would want to sign up at age 65. Speak with your employer to understand the details of your employer plan and how it interacts with Medicare.

Employer Coverage vs. Medicare

It’s crucial to compare your employer’s health plan with Medicare options, considering premiums, deductibles, co-pays, and the scope of coverage, including prescriptions as you decide what you would like to do.

If your spouse relies on your employer’s health plan, consider how your Medicare enrollment will affect their coverage. They may need alternative insurance if they’re not yet eligible for Medicare.

Health Savings Accounts

If you are contributing to a Health Savings Account (HSA), you cannot contribute once enrolled in Medicare. If you delay Medicare enrollment and maintain a high-deductible health plan (HDHP), you can continue HSA contributions until you enroll. Plan your contributions carefully as you approach age 65 to maximize benefits and avoid excess contributions. You can still use existing HSA funds for qualified medical expenses, including Medicare premiums (excluding Medigap), deductibles, copayments, and coinsurance.

The Various Parts of Medicare

  • Part A (Hospital Insurance): Primarily covers hospital care, skilled nursing facility care, hospice, and some home health care. Usually premium-free if you or your spouse have worked and paid Medicare taxes for at least 10 years. You can enroll in Part A even if you’re still working since it doesn’t usually require a monthly premium. It can provide additional coverage for hospital-related expenses.
  • Part B (Medical Insurance): Part B covers outpatient care, doctor services, preventive services, and some home health care. It’s important to compare the coverage and costs with your employer’s insurance to determine if enrolling in Part B makes financial sense. Unlike Part A, Medicare Part B has a monthly premium that can be higher for those with higher incomes (called the Medicare Income-Related Monthly Adjustment Amount (IRMMA). You can delay Part B without penalty if you have employer insurance.
  • Part C (Medicare Advantage): Offers an alternative to Original Medicare and is provided by private insurance companies (i.e. Kaiser). Includes all benefits and services covered under Parts A and B and often includes prescription drug coverage (Part D).
  • Part D (Prescription Drug Plan): Part D also has a premium and is subject to IRMMA.  If you delay enrolling in Part D because you have creditable prescription drug coverage through your employer, you won’t face a late enrollment penalty. Once you lose creditable coverage you have 63 days to sign up to avoid the late penalty.

COBRA and Medicare

If you retire before age 65 and continue your employer plan through COBRA, know that COBRA is not considered creditable coverage for delaying Medicare enrollment without penalty. You can use COBRA to bridge the gap between retirement and age 65, but you will want to plan very carefully to make sure to complete your Medicare enrollment by your 65th birthday.

It is very important to plan your transition from employer insurance to Medicare carefully to avoid gaps in coverage and potential penalties. Visit, consult with your financial planner, or for free one-on-one Medicare support find your local

State Health Insurance Assistance Program (SHIP) office at so that they can help you navigate the complexities of Medicare and employer coverage, ensuring you make the most cost-effective and beneficial decisions for your situation.

Below is a helpful flowchart that you can use to avoid Medicare late enrollment penalties.

Jennifer Bush
Jennifer Bush

Jennifer’s focus is on guiding clients through the pivotal transition into retirement, ensuring they navigate this significant phase with confidence and clarity.

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