Do I Have to Sign Up for Medicare at 65 If I'm Still Working?

For most people who are still working at 65 with health insurance through the job, the answer is no. If your employer has 20 or more employees and you're covered by that group health plan, you can usually delay Part B and never pay a late penalty for it.

But the size of the company matters more than almost anything else here, and that's the part people miss.

01The 20-employee rule is the whole ballgame

When you have two kinds of coverage, Medicare has rules about which one pays your bills first. Those rules hinge on how many people your employer has.

If your employer has 20 or more employees, the group plan pays first and Medicare pays second. You're fine to wait on Part B while you're still working and covered.

If your employer has fewer than 20 employees, it flips. Medicare pays first, and the group plan pays second. So if you skipped Part B, there's no primary payer at all. Your job insurance can legally pay very little, and the rest lands on you.

This is the part that doesn't get talked about enough when somebody's still working at 65. Six employees at a shop in Rogersville is a completely different situation from 600 at a plant in Kingsport, even though the insurance card in your wallet looks the same.

One detail worth knowing: both full-time and part-time employees count toward that 20.

02What it costs if you get it wrong

Two penalties, and they're the kind that follow you around.

The Part B late enrollment penalty adds 10% to your Part B premium for each full 12-month period you could have signed up and didn't. You keep paying it for as long as you have Part B, which for most people means the rest of their life.

Part D works differently. If you go 63 days or more without creditable drug coverage, you pick up a penalty of 1% for every month you went uncovered.

"Creditable" just means your drug coverage is expected to pay, on average, at least as much as Medicare's drug coverage would. Your plan is required to tell you whether yours qualifies, and they send that notice every year. Keep it somewhere you can find it.

Not sure how this applies to your own situation? I'll walk through it with you. No cost for the help, and no obligation to enroll.

Logan Cope · Licensed Insurance Agent

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03The two things that trip people up

Your health savings account. Once you're enrolled in Medicare, you can't keep contributing to an HSA. Medicare.gov advises stopping contributions 6 months before you retire or file for Social Security, because Part A can be backdated up to 6 months. Contribute during a month you turn out to have been covered and you're looking at a tax penalty.

COBRA and retiree coverage don't buy you time. This is the expensive one. Your 8-month window to sign up for Part B starts the month after your employment ends or your group coverage ends, whichever comes first. It does not start when COBRA runs out.

Medicare doesn't count COBRA or retiree coverage as coverage based on current employment. So people take COBRA for 18 months, assume they're covered, and come out the other side with a gap and a permanent penalty.

04What to do next

1. Ask HR how many employees the company has. Not a guess, the actual number.
2. Ask whether your prescription drug coverage is creditable. They have to tell you, in writing.
3. If you have an HSA, stop contributions 6 months before you plan to retire or file for Social Security.
4. Write down the date your employment or your coverage ends. That date starts the 8-month clock.
5. When the job does end, start Part B about a month before your coverage stops so you don't have a gap.

05Nobody's going to remind you

There's no letter that shows up about any of this. Social Security isn't going to call. And your employer's HR department often doesn't know Medicare's rules, because it isn't their job to.

If you're inside a year of turning 65 and still working, it's worth 20 minutes with somebody who deals with this every week.