Medicare While Working: What to Do With Employer Coverage

Employee discussing employer health coverage

Yes, you can work and have Medicare at the same time, and you do not have to retire to be covered. If you or your spouse are still working at 65 and have health insurance through that job, you may be able to delay Part B without a penalty and sign up later. The details depend on your employer’s size, the kind of coverage you have and when you stop working. This guide walks through each of those so you can decide with confidence.

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TL;DR

If you are still working and have group health insurance based on current employment, you can generally wait to sign up for Part B without a late penalty. Medicare explains the rule.
When the job or the coverage ends, you get an 8-month Special Enrollment Period to sign up for Part B. COBRA does not stop that clock.
Retiree coverage, COBRA, VA coverage and Marketplace plans do not count as coverage based on current employment.
If you contribute to a Health Savings Account (HSA), stop contributions 6 months before you apply for Medicare or Social Security benefits.
Check your drug coverage too. A Part D penalty can apply after 63 days or more without creditable drug coverage.

Can you have Medicare and keep working?
When you can delay Part B without a penalty
Part A and Part B: how timing works
What happens when you stop working or lose coverage
The late enrollment penalties, with numbers
Health Savings Accounts: the trap many workers miss
Should you take Part B anyway?
Special situations to check
How we can help you decide
Mistakes to avoid when working past 65
FAQ
Sources

Can you have Medicare and keep working?

Yes. Medicare eligibility starts at 65 and has no work requirement. Working does not take away your eligibility, and nobody is forced to sign up for every part of Medicare on their 65th birthday.

What changes when you are still working is the timing. Medicare says that if you or your spouse are still working when you turn 65, you may choose to delay Part B, and if you don’t take Part B you will have Part A only. Whether delaying is smart for you depends on what your job plan offers and costs, not on a single rule that fits everyone.

If you want a broader primer first, our simple guide to getting started with Medicare covers the parts of Medicare and how they fit together.

When you can delay Part B without a penalty

The key phrase is “group health plan based on current employment.” Medicare says that if you or your spouse are still working and have group health insurance available to everyone at the company, you may be able to wait to sign up for Medicare without a Part B late enrollment penalty.

Social Security, which handles Part B enrollment, describes a Group Health Plan as insurance offered by an employer, union or association to its members while they are still working. It also notes that employers with 20 or more employees must offer workers and spouses age 65 and older the same benefits as younger employees.

What counts, and what does not

This is where many people get caught. Social Security states that coverage based on current employment does not include COBRA, retiree health coverage, VA health coverage, or individual coverage such as a Marketplace plan. Its Group Health Plan definition adds that continued coverage based on severance pay and health savings accounts do not count either.

A quick way to sort your situation:

Your coverage	Counts as current-employment coverage?
Your own employer’s group plan while you work	Yes
Your spouse’s employer plan while your spouse works	Yes
COBRA after leaving a job	No
Retiree coverage from a former employer	No
VA health coverage	No
Marketplace or other individual plan	No
An HSA on its own	No

If you are unsure which bucket your plan falls in, your employer’s benefits office can tell you whether it is a group health plan based on current employment. We can also help you sort it out as part of new-to-Medicare guidance.

Employer size matters for who pays first

When you have Medicare and other insurance, one pays first (the primary payer) and the other pays second. The primary payer pays up to its limits, and the secondary payer only pays costs the primary payer didn’t cover.

For people on Medicare because they are 65 or older, Medicare pays first in general. The exception is job-based coverage. Medicare’s coordination page says that when your group health plan comes through an employer with 20 or more employees, the group plan pays first and Medicare pays second. With fewer than 20 employees, Medicare pays first and the employer plan pays second.

Primary and secondary payer by employer size

This is why employer size is the first question to ask HR. At a small employer, skipping Part B can leave real gaps, because your employer plan may expect Medicare to pay first. Ask your benefits administrator in writing how their plan coordinates with Medicare if you are 65 or older.

Tell every doctor, hospital and pharmacy about all your coverage. Medicare notes that this helps claims go to the right payer first.

Part A and Part B: how timing works

Most people think of Medicare as one decision. It is really several, and they do not all follow the same clock.

Part A (hospital insurance): If you take Part A only while working, you have hospital coverage through Medicare and keep your employer plan.
Part B (medical insurance): This is the part you may delay if your employer coverage qualifies. It carries a monthly premium, which is $202.90 in 2026 for the standard amount, per Medicare’s penalty page.
Part D (drug coverage): Separate rules apply, covered below.

Social Security says that after 65, if you have been covered by an employer group health plan, a Special Enrollment Period lets you sign up for or add Part B with no penalty. You can sign up for Part B any time while you or your spouse are working and still covered by the plan.

At our agency we often see people assume that a plan they like is reason enough to ignore Medicare entirely. It can be reason to delay Part B, but only if the plan qualifies. Our guide to Medicare enrollment periods shows how the Initial Enrollment Period and the Special Enrollment Period fit together.

What happens when you stop working or lose coverage

The 8-month Special Enrollment Period is the safety net. Medicare says that when you stop working or lose your health insurance, you have an 8-month window to sign up for Part B, and it starts even if you choose COBRA or other non-Medicare coverage.

Two details make a real difference:

The 8 months run from the earlier of two events. Social Security’s definition says you can sign up without penalty while covered by the plan or within 8 months after employment ends or the plan coverage ends, whichever comes first. If your employer plan continues for a time after your last day, the clock still counts from when you stopped working.
COBRA is not a pause button. Because COBRA is not coverage based on current employment, taking it does not extend your window. Our article on COBRA versus Medicare goes through that choice in detail.

How fast does coverage start?

Social Security says Part B coverage generally begins the first day of the month after you sign up. Medicare says it starts the month after Social Security or the Railroad Retirement Board processes your completed form, as described on its working past 65 page.

That means planning ahead matters. If your employer plan ends on the last day of a month, start the paperwork before then so you do not land in a gap.

A simple timeline

Months before you retire: Ask HR when your coverage ends and whether it is group coverage based on current employment.
Within a few weeks of your last day: Submit your Part B application along with proof of your employer coverage. Social Security can tell you the forms it needs for your situation.
Within 8 months of your last day or coverage end: This is your outer limit for penalty-free enrollment.
Soon after: Choose your supplemental or Medicare Advantage coverage and your drug plan.

The late enrollment penalties, with numbers

Penalties are the main fear for people working past 65, and they are avoidable when your coverage qualifies.

Part B

Medicare says that if you qualify for a Special Enrollment Period, you generally will not pay a Part B penalty. Without one, the penalty is generally an extra 10% for each full 12-month period you could have signed up but didn’t, added to your monthly premium for as long as you have Part B.

Here is the worked example from Medicare: if you waited two full years (24 months) and did not qualify for a Special Enrollment Period, your 2026 Part B premium would be $243.50. That is the $202.90 standard premium plus a $40.58 penalty, with the total rounded.

KFF reaches the same conclusion in plain terms: the Part B penalty is 10% of the standard premium for each 12-month period you delayed. Our own breakdown of Medicare late enrollment penalty costs shows how it adds up over the years.

Part D

Drug coverage has its own rule. Medicare says a Part D penalty may apply if you go 63 or more days in a row without Part D or other creditable prescription drug coverage after your Initial Enrollment Period. The formula is 1% of the national base beneficiary premium ($38.99 in 2026) times the number of full months without coverage, rounded to the nearest $0.10 and added to your monthly Part D premium.

If your employer plan includes drug coverage, ask HR for the written notice saying whether it is creditable. Keep it. It is your proof that you had no gap.

The Part D question is also a good time for a prescription plan review, so your medicines are checked against the plan you pick.

Health Savings Accounts: the trap many workers miss

If you have an HSA paired with a high-deductible plan, Medicare enrollment changes what you can do with it. The Journal of Accountancy reports that contributions are not allowed once you have other coverage besides the HSA-eligible plan, including Medicare Part A. You can keep using the money already in the account for qualified medical expenses.

There is a timing catch. Medicare advises that you and your employer stop contributing 6 months before you retire or apply for Social Security or Railroad Retirement benefits to help avoid a tax penalty. The Journal of Accountancy also notes that contributions are blocked once a worker is automatically enrolled in Medicare through collecting Social Security at 65.

Because this involves tax rules, talk with a tax professional before you stop contributions or apply for benefits.

Should you take Part B anyway?

Not everyone should delay. Some people with a qualifying employer plan still choose to enroll in Part B at 65. Reasons vary, and these are the questions to weigh:

What does the employer plan cost you each month? Compare that with the Part B premium and what your plan covers.
Does your spouse rely on your plan? Your spouse’s own Medicare timing follows their own work history and coverage.
Do you see doctors outside your plan’s network? Coverage rules differ between employer plans and Medicare.
How soon will you retire? If you plan to leave within a year, getting your paperwork ready early can make the changeover smoother.
Is your employer small? Under 20 employees, Medicare pays first, so going without Part B can leave claims unpaid.

There is no single right answer, and that is what a side-by-side comparison is for. A local agent can put your employer plan next to your Medicare options so you see the actual numbers for your situation.

Special situations to check

Some groups follow different coordination rules or have different coverage that interacts with Medicare:

Veterans: VA coverage is not coverage based on current employment for Part B penalty purposes. See our article on Medicare for veterans and VA health care.
TRICARE beneficiaries: Rules differ again, as we explain in TRICARE and Medicare at 65.
Self-employed people: Individual coverage, such as a Marketplace plan, does not count as group coverage based on current employment. That generally means you should plan your Part B enrollment around your 65th birthday rather than delay.
Medicare Advantage while working: Some people choose a Medicare Advantage plan rather than keep a job plan. Read about Medicare Advantage guidance before deciding, because joining one generally means coordinating it with whatever employer coverage you keep.

How we can help you decide

Almond Insurance is a Medicare agency in Rockford, Illinois, serving people in Northern Illinois and Southern Wisconsin. We help people working past 65 compare their job coverage with Medicare Advantage, Medicare Supplement and Part D options, explain deadlines in plain language, and support the enrollment itself. Our approach is family-focused, with patient step-by-step explanations and yearly coverage reviews. Consumers do not pay us directly for the advisory service, since carriers compensate us when a client enrolls in a plan.

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If you are within a year of 65, about to retire, or watching a spouse’s job plan end, start with our Medicare enrollment assistance or browse all of our Medicare services. If you live near the state line, we also offer Medicare guidance for Beloit, WI residents.

Mistakes to avoid when working past 65

Assuming COBRA protects you. It does not extend your Part B window.
Waiting until the plan ends to ask questions. Ask HR early about plan type, employer size and creditable drug coverage.
Forgetting the HSA. Contributions made after Medicare starts can trigger a tax penalty. Stop 6 months ahead if you plan to apply for benefits.
Letting the 8 months slip. The window starts when work or coverage ends, whichever comes first.
Not telling providers about both plans. Claims may be routed to the wrong payer.
Skipping drug coverage details. A gap of 63 days or more can lead to a Part D penalty.

FAQ

Do I have to sign up for Medicare at 65 if I am still working?

Not always. If you or your spouse have group health coverage based on current employment, you may delay Part B without a penalty, as Medicare explains. Without that kind of coverage, delaying can lead to a penalty. Check with your employer and Social Security before you decide.

Which pays first, Medicare or my employer plan?

It depends mostly on employer size. With an employer of 20 or more employees, the group plan pays first and Medicare pays second. With fewer than 20, Medicare pays first, per Medicare’s coordination page.

How long do I have to enroll after I stop working?

You have an 8-month Special Enrollment Period to sign up for Part B after your work or coverage ends, whichever comes first. It applies even if you choose COBRA, according to Medicare. Coverage then starts the month after your form is processed.

What is the penalty for late Part B enrollment?

It is generally 10% of the standard premium for each full 12-month period you could have enrolled but did not. It stays on your premium as long as you have Part B. A qualifying Special Enrollment Period generally means no penalty.

Can I keep contributing to my HSA once I enroll in Medicare?

No. Contributions stop once you are enrolled in Medicare, including Part A. You can still spend the balance on qualified medical costs, and Medicare advises stopping contributions 6 months before you apply for benefits.

Medicare While Working: What to Do With Employer Coverage