Medicare while working past 65.
Should you take Medicare Part A and B at 65 if you're still working? It depends on your employer size, your HSA, and the cost of your employer plan vs Medicare. Below is the decision framework — and the costly mistakes to avoid.
The 20-employee rule (most important)
Whether your employer has fewer or more than 20 employees determines whether Medicare or your employer plan is your primary coverage:
Employer plan is primary
You can delay both Part B and Part D without penalty as long as you stay on the employer plan. Most people in this group only take premium-free Part A at 65. When you eventually leave the job, you have an 8-month SEP for Part B and 63-day SEP for Part D.
Medicare becomes primary at 65
You should enroll in Parts A and B at 65 even though you're still working. If you don't, your employer plan may pay only 20% (the "Medicare-secondary" amount) — leaving you with huge out-of-pocket costs. Skipping Part B in this scenario also triggers the lifetime late enrollment penalty.
How to verify: Ask your HR/benefits administrator: "Is our group health plan Medicare-primary or Medicare-secondary for employees over 65?" Get the answer in writing.
The HSA wrinkle
If you contribute to a Health Savings Account (HSA), enrolling in any part of Medicare — including premium-free Part A — disqualifies you from making future HSA contributions.
This is a hard IRS rule. If you want to continue HSA contributions, you must delay all of Medicare — including Part A. Only do this if:
- Your employer has 20+ employees (so Medicare isn't required as primary)
- You're getting significant employer match into the HSA
- You don't need Medicare Part A's hospital coverage as backup
When you stop HSA contributions and enroll in Part A later, Part A coverage is retroactive up to 6 months from your enrollment date. So stop HSA contributions at least 6 months before you plan to enroll in any Medicare.
Note: You can still spend existing HSA balances on Medicare premiums, deductibles, and copays after age 65. The restriction is only on new contributions.
When delaying Medicare makes sense
- You work for a company with 20+ employees with comprehensive group health coverage.
- Your employer pays a substantial portion of the premium (typical employer pays 70-80% of single coverage; 60-70% of family).
- Your employer plan has lower out-of-pocket maximums than typical Medicare Advantage plans.
- You contribute to an HSA and want to continue.
- Your spouse is on the same employer plan and not yet 65.
When taking Medicare at 65 makes sense
- Your employer has fewer than 20 employees.
- Your employer plan is high-cost (employee share over $400/mo individual).
- Your employer plan has a high deductible ($3,000+) without sufficient HSA contribution to offset.
- You're considering retirement within 24 months — easier to align.
- You've finished maxing out HSA contributions for the year.
- You're on COBRA (which is NOT creditable for Part B — you need to enroll).
Costly mistakes to avoid
- Assuming COBRA is creditable for Part B. It's not. The 8-month Part B SEP starts when active employment ends, not when COBRA ends. Many people lose Part B SEP by waiting until COBRA expires.
- Continuing HSA contributions while enrolled in Part A. The IRS treats those contributions as taxable income plus a 6% excise tax. Stop contributions before any Medicare enrollment.
- Skipping Part B at a small employer. If your employer has under 20 employees and Medicare is primary, your employer plan may only pay 20% if you don't have Part B — leaving you with massive bills.
- Missing the 8-month Part B SEP. Once active employment ends, you have 8 months. Miss it, and you'll wait until next General Enrollment Period (Jan-Mar with July 1 effective date) AND pay the lifetime late enrollment penalty.
- Not getting employer creditable coverage notice in writing. When you eventually enroll in Part B, SSA may ask for proof your employer coverage was creditable for the months you delayed. Get a written notice from HR every year you're on the plan past 65.
The decision tree
- Fewer than 20 → Enroll in both Part A and Part B at 65. Medicare is primary.
- 20 or more → Continue to Step 2.
- Yes, and you want to continue → Delay all of Medicare (no Part A either). Stop HSA contributions 6 months before any future Medicare enrollment.
- No, or you're willing to stop → Continue to Step 3.
- Employer plan costs less than Medicare ($185 Part B + Part D + supplemental) → Take only premium-free Part A. Delay Part B and Part D until employment ends.
- Medicare costs less → Consider enrolling in Part B at 65 and dropping employer plan if allowed (qualifying event).
Free Medicare-vs-employer cost comparison.
A licensed advisor reviews your employer plan benefits, your prescriptions, and the Medicare options in your county — then tells you whether to enroll in Medicare or stay on your employer plan. Free, no obligation.
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