Summary: Many people are still employed when they first become eligible for Medicare. If you’re still covered under employer insurance, you may choose to delay your Medicare coverage. Below, we’ll cover when you should sign up for Medicare if you’re still working. Estimated Read Time: 8 min
Most people become eligible for Medicare for the first time at age 65, and many individuals are still working full-time at this point in their lives. If this sounds like you, you’ll need to decide whether to take Medicare, keep the health insurance you get through your employer, or opt for a combination of both.
When Do I Apply For Medicare If I’m Still Employed?
If you’re turning 65, you will become eligible to sign up for Medicare three months before your birthday, even if you are still working. This Initial Enrollment Period lasts seven months, beginning three months before your birthday month, continuing through the month of your birthday, and ending three months after. There are multiple factors to consider when deciding if you should sign up for Medicare when you first become eligible. These factors include:
- You have large group employer coverage
- You have small group employer coverage
- You are employed but do not receive coverage through your employer
If any of these scenarios apply to you, you need to thoroughly understand all your options when deciding to enroll in Medicare while still working.
You Have Group Coverage, and Your Employer Has More Than 20 Employees
Suppose you (or your spouse) are still working when you become eligible for Medicare and have group coverage under an employer with over 20 employees. In that case, you may consider delaying your Medicare coverage.
Since most people qualify for a $0 monthly premium for Medicare Part A, many enroll as soon as they are eligible (regardless of whether they have employer coverage). You may choose to delay both Medicare Part A and Part B if you are making HSA contributions through your employer. If you qualify for a $0 monthly premium for Medicare Part A, there is no penalty if you sign up later.
When you have both Medicare Part A and job-based health insurance, your insurance plan will pay first, and Medicare will pay second.
When your employer has over 20 employees, Medicare considers your group insurance plan creditable coverage. This means you can delay enrolling in Medicare Part B without facing a late enrollment penalty. Since you must pay a monthly premium for Medicare Part B coverage, it may be worth delaying your coverage until you lose your insurance through your employer.
If you choose to delay your Medicare Part B, you will receive an eight-month Special Enrollment Period in which you can enroll in Part B without a late enrollment penalty. This period begins when you stop working (or lose your job-based health insurance, whichever comes first) and lasts eight months.
Though you have eight months to enroll in Medicare Part B after losing your employer coverage, you will have a shorter timeframe to enroll in supplemental Medicare coverage. If you wish to join a Medicare Advantage plan or a Medicare Part D Prescription Drug plan after losing your job-based health insurance, you will only have two months after your coverage ends to sign up.
If you enroll in Medicare Part B during your Special Enrollment Period and already have Part A, you will have six months after your Medicare Part B coverage begins to enroll in a Medicare Supplement plan.
Can I enroll in both Medicare Part A and Part B and keep my job-based health insurance? Enrolling in both Medicare Part A and Part B does not disqualify you from your employer’s group coverage. However, it’s important to remember that if your employer has over 20 employees, your group insurance plan is your primary coverage, and Medicare is your secondary. So, you might end up paying your Medicare Part B premium each month without benefitting it.
Can I decline my job-based insurance and only have Medicare? If you’re unhappy with your group coverage through your employer, you may consider enrolling in Medicare and dropping your job-based health plan. Remember that if you do not have a health plan through your employer or other creditable drug coverage, you must enroll in a Medicare drug plan when you become eligible to avoid a late enrollment penalty.
You Have Group Coverage, and Your Employer Has Less Than 20 Employees
When working for a smaller company (fewer than 20 employees), you will want to ask your employer if you must enroll in Medicare Part A and Part B to receive coverage.
Generally, with smaller companies, once you become eligible for Medicare, your job-based health insurance becomes secondary coverage, and your Medicare becomes your primary coverage. This means your healthcare services will be paid by Medicare first, and your group insurance pays second. Therefore, if you delay enrolling in Medicare once you become eligible, your employer health plan may provide little or no coverage. You may also be face a late enrollment penalty for delaying Medicare Part B.
Talk to your employer before signing up for Medicare. Though less common, your group health plan may not require you to sign up for Medicare once you turn 65. If your coverage through your employer is primary and Medicare is secondary, then you can choose to delay your Medicare Part B coverage without the risk of a penalty. Ensure your employer provides this information in writing so you can submit it as proof of enrollment in job-based insurance when signing up for Medicare Part B during your Special Enrollment Period.
You are Working But Do Not Have Coverage Through Your Employer
In most cases, if you are working past 65 and do not have coverage through your employer, you should sign up for Medicare as soon as you become eligible.
If you receive coverage through Medicaid, you may automatically be enrolled in Medicare once you turn 65. You should contact your state’s Medicaid office to determine if you need to sign up for Medicare.
If you have health insurance that is not from your job, such as coverage through the Health Insurance Marketplace, you will generally want to sign up for Medicare once you become eligible. For those enrolled in a Marketplace health plan and qualify for a $0 Medicare Part A premium, you will want to end your coverage once your Medicare coverage starts. After you become eligible for Medicare Part A, you will no longer qualify for help from the Marketplace to pay your premiums or other costs.
Medicare and Health Savings Account (HSA) Contributions
For those working past 65 and with a Health Savings Account through their employer, you may consider waiting to sign up for Medicare. If you are insured through a large employer (and thus have creditable coverage), you may delay enrolling in both Medicare Part A and Part B.
Once your Medicare Part A coverage begins, you can no longer make contributions to your Health Savings Account. If your Medicare coverage overlaps with when you or your employer made contributions, you will be subject to a tax penalty.
When you sign up for Medicare Part A during the three months before your birthday, your coverage begins on the month you turn 65. If you sign up during your birthday month or three months after, your coverage will start the next month. If you delay your Medicare Part A and sign up later, your coverage will begin six months back from when you sign up (coverage cannot start earlier than the month you turned 65).
Keep your coverage start times in mind. You’ll want to stop any HSA contributions before your Medicare Part A coverage starts so you don’t have to pay the tax penalty. You will be able to withdraw money from your HSA at any time after your Medicare coverage starts to help pay your out-of-pocket costs.
Medicare and COBRA: What You Need to Know
COBRA (the Consolidated Omnibus Budget Reduction Act) is a federal law that allows some workers and their families to continue their group coverage for a limited time after losing their health benefits. Typically, COBRA only applies to large companies with 20 or more employees; however, some states require smaller employers to also offer continuation of coverage for a limited time.
If you are eligible for Medicare and have COBRA coverage, you should sign up for Medicare as soon as possible to avoid late enrollment penalties and gaps in coverage.
Receiving COBRA coverage does not extend your Special Enrollment Period. If you delayed Medicare Part B because you had coverage through your employer, you will have eight months after your employment or job-based coverage ends to sign up without a penalty. This remains the same if you receive COBRA coverage. For example, if your employment ends in June, but you are offered COBRA coverage for 18 months, you must sign up for Medicare Part B by February to avoid a late enrollment penalty.
When To Sign Up for Medicare if You Have Retiree Insurance
For most, if you receive retiree insurance through your employer, you should sign up for Medicare as soon as you are eligible. Since most retiree health plans supplement Medicare, you may be required to enroll in Medicare Part A and Part B to stay enrolled in your retiree coverage. Medicare will be your primary insurance, and your retiree insurance will pay second.
Retiree plans and coverage can vary significantly between companies. For example, some companies may include a Medicare prescription drug plan as part of their retiree plan, while others may consist of a Medicare Advantage plan (Medicare Part C) offering additional coverage. Make sure you understand what coverage you are receiving with your retiree plan.
If your plan does not include prescription drug coverage or your retiree insurance is not considered creditable drug coverage, you will need to enroll in a separate Medicare Part D plan to avoid a late enrollment penalty.
Get Help Navigating Medicare When You’re Still Working
As the age for full retirement benefits increases, more and more people are still working when they first become eligible for Medicare. If you’re working past age 65 and need help figuring out how and when to sign up for Medicare coverage, we can help. Whether you’re receiving health coverage through your employer or are getting ready to receive retiree insurance, our team of licensed insurance agents can help you avoid gaps in coverage and late enrollment penalties. Give us a call at the number above.
Working Past 65, Medicare. Accessed August 2023
When Can I Sign Up for Medicare, Medicare. Accessed August 2023
Continuation of Health Coverage (COBRA), U.S. Department of Labor. Accessed August 2023