Medicare Basics

If you plan to keep working past age 65, you need to make specific decisions regarding Medicare enrollment to avoid penalties. Your options largely depend on the size of your employer and whether you will continue to have health coverage through your job. 

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Step 1: Understand your situation

Before doing anything, gather the following information to determine your path forward:

• Do you have employer health coverage? This includes coverage through your spouse's job, if applicable.

• How many employees are in your organization? For Medicare purposes, the threshold is 20 employees.

• Are you or your spouse already receiving Social Security benefits? If you are already collecting retirement or disability benefits, you may be automatically enrolled in Medicare Parts A and B at age 65. 

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Step 2: Decide on your health coverage

Your choices for enrolling in Medicare vary based on your employer's size. You should always speak with your company's benefits administrator to understand how your specific plan coordinates with Medicare.

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If your employer has 20 or more employees

In this case, your employer's health plan is the primary payer, and you have several options. 

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• Stay on your employer's plan and delay Medicare: You can delay signing up for Medicare Part B (medical insurance) and Part D (prescription drugs) without penalty as long as you have creditable coverage through your job. You can sign up for the premium-free Part A (hospital insurance) at age 65, but be aware this affects your ability to contribute to a Health Savings Account (HSA).

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• Switch to Medicare: You can drop your employer's plan and enroll in Medicare, either through Original Medicare or a Medicare Advantage plan.

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• Have both plans: You can have both Medicare and your employer's plan. In this scenario, your employer's plan pays first. Medicare pays secondary. 

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If your employer has fewer than 20 employees

If your employer has fewer than 20 employees, Medicare typically becomes your primary insurance at age 65. It's generally necessary to enroll in Medicare Parts A and B during your Initial Enrollment Period (IEP) to avoid penalties and potential coverage gaps, as your employer's plan may not cover services Medicare would have paid for. 

If you are self-employed or have individual insurance

If you are self-employed or have an individual health plan, enroll in Medicare during your IEP to avoid penalties. 

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Step 3: Understand enrollment periods

To avoid lifelong penalties, enroll during the correct period. 

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• Initial Enrollment Period (IEP): This seven-month period includes the three months before and after your 65th birthday, plus the birthday month.

• Special Enrollment Period (SEP): If you have creditable employer coverage at 65, you can delay enrollment. You have an eight-month SEP after your job or coverage ends to enroll in Parts A and/or B without penalty.

• General Enrollment Period (GEP): If you miss your IEP or SEP, you can enroll during the GEP (January 1 to March 31 annually), but coverage starts later, and you'll likely incur a lifelong Part B penalty. 

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Step 4: Manage Social Security benefits

Delaying Social Security benefits past your full retirement age can increase your monthly payment. You don't need to take action at age 65 if you wish to delay benefits. 

 

Key Medicare considerations while working

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• Most people qualify for premium-free Part A and can enroll at 65 even with employer coverage.

• Part B has a monthly premium, so delaying enrollment if you have employer coverage can save money.

• If your employer's prescription drug coverage is "creditable," you can delay Part D enrollment without penalty. Your employer must provide annual notification about the coverage's credibility.

• Your six-month Medigap Open Enrollment Period starts with your Part B coverage, allowing you to buy a policy without medical underwriting. Delaying Part B delays this window.

• Enrolling in any part of Medicare stops HSA contributions, but you can still use existing funds for qualified medical expenses.