Medicare and working after 65: What you need to know about employer coverage

If you’re turning 65 and still working, or covered through a working spouse’s employer plan, you’re not alone. Today, millions of Americans are staying in the workforce well beyond traditional retirement age. But working past 65 creates a unique decision point: Medicare works differently when you have job-based insurance compared to when you’ve fully retired.

Navigating Medicare when you’re still working can feel overwhelming. You may be unsure whether to enroll right away, worried about potential penalties for delaying, or confused about how Medicare coordinates with employer coverage.

This guide cuts through the complexity with clear insights to help you make confident decisions and avoid costly mistakes.

Do you have to enroll in Medicare at 65?

It depends. If you have health insurance through a large employer (20 or more employees), you usually don’t have to enroll right away — you can delay Medicare Part B and Part D without penalty because your employer plan remains your primary coverage.

However, if you’re covered by a small employer (fewer than 20 employees), Medicare generally becomes your primary insurance at 65. In that case, you do need to enroll in Medicare Part A and Part B to avoid gaps in coverage and late-enrollment penalties.

Here’s how the rules typically break down:

If you or your spouse work for a large employer (20+ employees):

When you’re covered by a large employer’s health plan, the law requires that your employer insurance pays first. In this case, your employer plan remains your primary coverage, and Medicare is secondary, meaning it only steps in after your group plan has paid its share.

Because of this setup, you can delay enrolling in Medicare Part B (which has a monthly premium) and Part D (prescription drug coverage) without penalty as long as you stay on the employer plan. This allows you to avoid paying for Medicare benefits you may not need yet, especially if your employer coverage is comprehensive.

If you or your spouse work for a small employer (fewer than 20 employees):

When you’re covered by a small employer’s health plan, the rules work in reverse — Medicare becomes your primary coverage, and your employer insurance only pays after Medicare has covered its share. Because of this, staying solely on your work insurance isn’t enough.

In most cases, you’ll need to enroll in Medicare Part A and Part B when you turn 65 to make sure you’re fully covered. If you don’t, you could face serious gaps in coverage and be responsible for large medical bills. You also risk late-enrollment penalties that permanently increase your Medicare costs.

How does Medicare work with your employer-based insurance?

Here’s a quick guide to how Medicare coordinates with employer coverage:

What is “creditable coverage” and how does it affect Medicare enrollment?

The term creditable coverage simply means your existing insurance is as good as — or better than — what Medicare would provide.

This is especially important when deciding whether to delay:

• Part B (doctor visits and outpatient care)
• Part D (prescription drug coverage)

If your current plan meets Medicare’s standards for coverage, you can safely delay enrolling in those parts without facing lifetime penalties.

Always ask your employer or benefits administrator for a Creditable Coverage Notice in writing. You’ll need it later as proof.

How to time your Medicare enrollment after delaying

When you retire — or your employer coverage ends — you’ll enter a Special Enrollment Period (SEP) that allows you to sign up for Medicare without a penalty.

• You’ll have 8 months to enroll in Part B after you stop working or lose employer coverage — whichever comes first.
• You’ll have 2 months to enroll in a Part D prescription drug plan if your employer drug coverage ends.

What happens when Medicare becomes your primary insurance

Once you retire or lose your employer-based coverage, Medicare steps in as your main insurer. This means your old employer plan will no longer pay first, and in many cases it won’t pay at all once Medicare is supposed to be primary. If you haven’t enrolled in Medicare yet, medical claims could be denied by your former plan.

That’s why it’s critical to enroll in Medicare before your employer coverage ends. Otherwise, you may end up paying the full cost for doctor visits, hospital stays, or prescriptions — expenses that Medicare would have covered.

Can you still contribute to an HSA after enrolling in Medicare at 65?

Health Savings Accounts (HSAs) are a great way to save for medical expenses—but once you enroll in any part of Medicare, even the free Part A, you can no longer contribute to your HSA.

If you’re still working and want to keep contributing to your HSA, do not enroll in Medicare yet. Also, if you apply for Social Security benefits, you’ll automatically be enrolled in Part A, ending your HSA eligibility.

Talk to a financial advisor or benefits specialist to time your decisions carefully.

Common Medicare mistakes to avoid

Even savvy planners can trip up when it comes to Medicare and employer coverage. Here are some of the most common mistakes to watch for — and why they matter:

• Assuming COBRA or retiree coverage lets you delay Medicare. It doesn’t. Medicare is still considered primary, and relying only on COBRA or retiree coverage can leave you exposed.
• Missing your Special Enrollment Period (SEP). Skipping this window can lead to permanent late penalties and gaps in your insurance.
• Not checking if your employer plan is “creditable”. If it isn’t, you could unknowingly rack up late fees for Medicare Part D.
• Overlooking how your spouse’s employer plan fits in. Failing to coordinate benefits can affect your eligibility, costs, and coverage.

Final Thoughts: Take Time to Plan

Working past 65 gives you flexibility, but it also means Medicare enrollment isn’t automatic or one-size-fits-all. The key is to take time to understand your specific situation and make decisions based on what’s best for your health, your finances, and your future.

If you’re unsure about your next step, reach out to:

• Your HR or benefits department
• A licensed Medicare agent
• Medicare.gov or Social Security for official guidance

The more you understand now, the more smoothly you can transition when the time comes to retire.