Do I have to sign up for Medicare at 65 if I am still working?
Sometimes yes, sometimes no, and the deciding factor is how many people your employer has. Getting this wrong costs you for life.
This is the question we get wrong answers about more than any other, usually from a well meaning coworker. The answer hangs on one number: how many employees your company has.
If your employer has 20 or more employees
Your group health plan pays first and Medicare pays second. You can generally delay Part B without any penalty for as long as you are actively working and covered by that plan.
When the job or the coverage ends, you get an eight month Special Enrollment Period to pick up Part B with no penalty. Eight months from the end of employment or the end of the coverage, whichever comes first.
Most people in this situation still take Part A at 65, because it usually costs nothing. There is one important exception below.
If your employer has fewer than 20 employees
Now Medicare pays first and your group plan pays second. If you do not enroll in Part B, your group plan can pay as though Medicare had already covered its share, and you are left holding the difference.
For small employers, and there are a lot of them in South Texas, you generally need to take Part B at 65. Ask your HR or your plan administrator to confirm in writing how the plan coordinates with Medicare. Do not rely on a verbal answer.
The HSA trap
If you contribute to a Health Savings Account, this one matters and almost nobody hears about it in time.
Once you are enrolled in any part of Medicare, including premium free Part A, you can no longer contribute to an HSA. Worse, when you eventually file for Social Security or Medicare after 65, Part A can be backdated up to six months. Any HSA contributions made during those backdated months become excess contributions and get taxed.
If you plan to keep funding an HSA past 65, stop contributions at least six months before you file for Medicare or Social Security. You can still spend what is already in the account, including on Medicare premiums.
Coverage that does not count
Some coverage feels like employer insurance but does not protect you from the penalty. Delaying Part B based on any of these is a mistake.
- COBRA. It is not active employment coverage. The clock is already running.
- Retiree coverage from a former employer. Same problem.
- A Marketplace plan from HealthCare.gov.
- Your spouse's plan, if that spouse is retired rather than actively working.
The rule is active employment, either yours or your spouse's. Not simply having other insurance.
What about Part D
Drug coverage has its own separate penalty. Your employer plan should send you a notice each year stating whether its drug coverage is creditable, meaning at least as good as Part D.
Keep those notices. If it is creditable, you can delay Part D safely. If it is not, the penalty starts accruing whether anyone told you or not.
What to do about it
- Ask HR for the employee count and for written confirmation of how the plan coordinates with Medicare.
- Find the creditable coverage notice for your drug plan and keep it.
- If you fund an HSA, decide your stop date at least six months out.
- Set a reminder for three months before you actually retire, not the week of.
If the answer is not obvious after that, call us. Fifteen minutes on this now is cheaper than a penalty you carry for the rest of your life. See how the penalty is calculated to understand what is at stake.
Common follow-up questions
My spouse is still working and I am 65. Can I delay?
Usually yes, if you are covered by their active employer plan and that employer has 20 or more employees. The same rules apply through the working spouse.
I took Part A at 65 and I am still working. Did I make a mistake?
Only if you contribute to an HSA. Otherwise Part A alongside a large employer plan is normal and usually costs nothing.
Does COBRA count as employer coverage for Medicare?
No. This is the most expensive misunderstanding on this page. Your enrollment window is running while you are on COBRA.
Want this looked at properly?
We are an independent agency in McAllen serving Hidalgo, Cameron and Starr counties. No cost to talk it through.
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