Employer size decides who pays first
There is no single answer to whether you should take Medicare while still working. The answer is set by how many people your employer employs, because that determines which coverage is primary.
With 20 or more employees, the group health plan generally pays first and Medicare pays second. In that situation many people keep the employer plan and delay Part B, avoiding the premium while they are covered.
With fewer than 20 employees, Medicare generally pays first. If you have not enrolled in Part B, there is no primary payer for the services Part B would have covered, and the employer plan may pay only what it would have paid as secondary. People discover this when a large claim is denied.
Taking Part A while you work
Premium-free Part A is usually worth taking at 65 even when you keep employer coverage, because it costs nothing and can pay secondary on hospital stays.
One important exception: if you contribute to a health savings account, enrolling in any part of Medicare ends your ability to contribute. People who want to keep funding an HSA sometimes delay Part A as well, and that is a decision to make deliberately with the employer and a tax adviser rather than by default.
The eight-month window when work ends
When the employment or the coverage ends, whichever happens first, an eight-month Special Enrollment Period begins the following month. Signing up inside it generally avoids the Part B late enrollment penalty.
Two things catch people out. COBRA is not coverage from current employment, so taking COBRA does not extend this window; the clock started when the job ended. And the Part D clock is separate: you have 63 days from the end of creditable drug coverage before a Part D penalty starts accruing.
Get it in writing
Before deciding, ask your benefits administrator two questions in writing: how many employees does the employer have for Medicare coordination purposes, and is the drug coverage creditable. Those two answers decide whether delaying is safe and whether a Part D penalty would accrue.
Frequently asked questions
Can I delay Medicare Part B if I am still working?
Generally yes if your employer has 20 or more employees, because the group plan pays first. If the employer has fewer than 20 employees Medicare usually pays first, and delaying Part B can leave large bills uncovered.
How long do I have to sign up after I stop working?
Eight months, beginning the month after the employment ends or the group coverage ends, whichever comes first. Enrolling within that Special Enrollment Period generally avoids the Part B late enrollment penalty.
Does COBRA count as coverage from current employment?
No. COBRA is not current employment coverage for this purpose, so it does not extend your Special Enrollment Period. The eight-month clock started when the employment or the active coverage ended.
Can I keep contributing to my HSA after I enroll in Medicare?
No. Enrolling in any part of Medicare, including premium-free Part A, ends HSA contribution eligibility. You can still spend what is already in the account. People who want to keep contributing sometimes delay Part A deliberately.
Sources
This guide explains officially published rules and figures. It is not an insurance quote and not an eligibility determination. Only HealthCare.gov, Medicare.gov, Social Security or the carrier can determine your eligibility and your actual price.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. Not connected with or endorsed by the U.S. government or the federal Medicare program.
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