Do You Need Medicare If You’re Still Working at 65?

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Medicare eligibility starts at 65. Signing up early can help you avoid any premium surcharges. You have a little more flexibility if you are 65 or older.

Medicare eligibility starts at age 65. Your initial window to enroll is the seven-month period that begins three months before the month of your 65th birthday and ends three months after it. Senior citizens are advised to sign up early to avoid costly penalties later in life.

Specifically, if you fail to sign up for Medicare on time, you’ll risk a 10 percent surcharge on your Medicare Part B premiums for each year-long period you go without coverage upon being eligible. (Since Medicare Part A is usually free, a late enrollment penalty doesn’t apply for most people.) A different set of rules will apply if you are still working at 65.

There’s no need to increase coverage.

Many seniors, who are not working at 65, rush to enroll in Medicare as soon as possible. If you are still working at age 65 and have coverage through a group plan with 20 or more employees, you don’t need to sign up for Medicare. If your employer has fewer than 20 employees, then you must enroll in Medicare Parts A or B. This will be your primary insurance. Your employer plan could pay less or none if you do not enroll.It is often a good idea to sign up for Medicare Part A as soon as possible, even if your current health insurance covers you. This won’t cost anything and Medicare can be your secondary insurance. In this instance, Medicare could pay for any medical expenses that your primary insurance (in this example, your work-related health plan) does not cover.

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The only exception is if you’re contributing to a health savings account and wish to continue doing so. Even if the Medicare enrollees continue to be covered under a qualified HSA-qualified, high-deductible health plan, they are not permitted to contribute to an HSA.

Your Medicare special enrollment period

If you have at least 20 employees, and are still employed and covered by the plan when you turn 65 years old, you can delay enrollment in Medicare. This is specifically for Medicare Part B. It allows you to avoid paying the Part B premium, while being covered by your employer’s plan. If you are fired from your job or your employer ceases to offer coverage, you will be able to enroll in Medicare for eight months. It will begin the month you leave your employer or the month your group health coverage expires – whichever comes first.

You won’t be charged premium surcharges if you sign up within those eight months. If you are unable to enroll in Part B because your spouse has an employer-sponsored plan that covers you, the eight-month special enrollment period will be available.

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It must be current employer in both cases. If you’re covered under COBRA or a retiree plan, you won’t avoid the Part B late enrollment penalty when you eventually enroll, and you won’t have access to a special enrollment period to sign up for Part B — you’ll have to wait for the general enrollment period instead.

Do the math

If you are covered by a qualified group plan, you don’t have to sign up for Medicare until you turn 65. However, it might be worth doing so if your employer doesn’t provide a substantial subsidy. Calculate the amount you are paying for group coverage and your benefits. Next, compare that figure to what you will pay for Medicare. Take into account everything, from coinsurance to premiums, deductibles, copays, and copays.

Keep in mind that for comprehensive coverage under Medicare, you’ll need a Part D drug plan to accompany Parts A and B. Even if you are eligible for a special enrollment period, signing up for Medicare at 65 might make the most financial sense.

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It’s a good idea to sign up for Medicare if you are 65 years old or older and still work. You might be able to lower your out-of pocket costs by enrolling.

This is a situation that millions of people find themselves in. According to the Bureau of Labor Statistics, 30.2% of Americans aged 65-74 are expected to be working by 2026.

Medicare can be complicated and there are many caveats to consider and unexpected expenses that must be avoided. So for working people 65 or older, here’s help with figuring out when to enroll in Medicare and how to avoid costly late-enrollment penalties and gaps in coverage.

Note for married couples: If one spouse is covered under the employer’s insurance, this information also applies to you once you turn 65.

Cost equation: Can Medicare save you money

You may find Medicare more affordable and better coverage if your employer or your spouse requires that you pay a significant portion of your group insurance premium. Compare your current coverage and out of pocket expenses, including premiums, copays, and coinsurance, with Medicare’s costs and benefits. Medicare may also cover some expenses that are not covered by your group insurance.

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Medicare Part A: Why not get it if it’s completely free?

If by the time you reach 65 you’ve worked a total of approximately 10 years over your career, you’re entitled to premium-free Medicare Part A, which pays for in-patient hospital charges and more.

When your employer plans offer good coverage and low costs, why sign up for additional hospital insurance? In some cases, Medicare Part A might cover you even if your employer plan doesn’t.

As with many aspects of Medicare there are exceptions and caveats.

Employers with 20 or more employees: If your spouse’s employer employs 20 or more people and has a group insurance plan, you don’t need to sign up for Medicare at age 65 if this doesn’t make financial sense. (Remember, Part A is available for all people.

Employer with fewer 20 employees: If your employer has fewer 20 employees, and the health coverage does not belong to a multiemployer plan, you will need to enroll in Medicare Part A at 65. This will be your primary insurance. “Primary” refers to Medicare paying first and then the employer insurance covering any claims that might have been covered under that policy, but were not covered by Part A.

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If you have an HSA, and you want to continue contributing: You must defer enrollment in Medicare Part A or Medicare Part B if you are saving to a Health Savings Account. This is because HSA contributions can only be made by Medicare enrollees. To avoid a tax penalty, it is advisable to stop contributing to HSAs at least six months before you sign up for Medicare.

Penalties: You could be subject to penalties if you fail to enroll in Medicare Part A by age 65 or fail to register within eight months of losing coverage from your employer (whichever occurs first). To avoid gaps in your coverage, sign up for Part A as soon as your employer’s coverage ends.

Do not delay Part A: Talk to your spouse’s benefits administrator before you delay Medicare. This will help you understand your group plan’s coverage without Part A once you turn 65.

Medicare Part B: Avoid premiums by delaying

If you’re 65 or older and you or your spouse still have employer health coverage, you will probably want to delay enrolling in Medicare Part B, which pays for doctor visits and many other outpatient services. Why? Why? Because, unlike Medicare Part A and Part B, everyone has to pay a premium. It’s not a free extra.

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Like Part A, your individual circumstances will influence your decision. There are also pitfalls you should avoid.

Employers with 20 or more employees: If your spouse’s employer employs 20 or more people and has a group insurance plan, you are not required to enroll in Medicare at 65. The clock begins to tick once you quit working or lose coverage from your employer (see below).

Employer with fewer 20 employees: If your employer has fewer 20 employees, and your health coverage is not part a multiemployer plan, you will need to enroll in Medicare Part B at 65. This will be your primary insurance.

If you are a member of an HSA, and wish to continue contributing to it: You must wait to sign up for Medicare Part B if you have an HSA. You must stop contributing to your HSA for at least six months before signing up for Part B. You should sign up for Medicare at the latest one month before you lose coverage from your employer or stop working.

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Possible penalties: You have to sign up for Medicare Part B within 8 months of losing your employer coverage or stopping working. If you fail to do so, your premiums could include a penalty for the rest of life. You may also have to wait until you enroll in Medicare to get health care coverage.

Do not delay Part B enrollment: Before you postpone Medicare Part B enrollment, talk to your spouse’s benefits administrator about how your group policy will protect you after age 65.

Special situations: Previous employers, military, vets

You must enroll in Medicare Parts A & B if you have any health insurance, including COBRA coverage from your spouse or retired health coverage.

You should speak with your military or veteran health benefits to learn when you can enroll in Medicare.

It is complicated. Get all the help you need.

Medicare rules and processes are complicated and full of exceptions. If you miss something in the enrollment rules you could be subject to penalties or gaps in coverage. Before you enroll in Medicare or delay enrollment, you should speak with your benefits administrator and Medicare.

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