The Good News: You May Be Able to Delay Part B
One of the most common questions from people turning 65 while still employed is whether they must enroll in Medicare Part B right away. The answer depends on a single critical factor: the size of your employer. If you are actively working and covered by a group health plan through an employer with 20 or more employees, you can delay Part B enrollment without any penalty. Your employer coverage acts as primary insurance, and Medicare would be secondary even if you enrolled. Most people in this situation choose to delay Part B to avoid paying the monthly premium unnecessarily.
This right to delay also extends to coverage through a spouse's active employer, provided that employer has 20 or more employees and you are covered under the group health plan as a dependent. The key word throughout is "active" employment. The employer must still be employing your spouse or you. Retiree coverage does not count.
When You Cannot Delay: Small Employer Exception
If your employer or your spouse's employer has fewer than 20 employees, the rules flip entirely. In this situation, Medicare becomes primary and the employer plan becomes secondary. If you are not enrolled in Medicare Part B, the employer plan may refuse to pay for services that Medicare would have covered. You could end up with large bills because your employer plan treats Medicare as the primary payer and your Medicare is not active.
If you work for a small employer (under 20 employees), you should generally enroll in both Parts A and B at 65, even if you remain working. Contact your HR department or benefits administrator to confirm how many employees your company has and how your group plan coordinates with Medicare.
The Special Enrollment Period: Your 8-Month Window
When you eventually stop working or lose the qualifying employer coverage, you enter an 8-month Special Enrollment Period (SEP) to sign up for Part B without penalty. This 8-month window begins the month after either your employment ends or your group health plan coverage ends, whichever happens first.
A critical point many people miss: the SEP begins when your active employment ends, not when your coverage ends. If your employer allows you to keep coverage for an extra month after your last day, your SEP clock still starts on the month after your employment ends. Do not wait until you receive a termination notice from your insurer. Act early in your 8-month window to avoid rushing near the deadline.
Common Mistakes to Avoid
- Confusing retiree coverage with active employer coverage: Retiree health coverage offered by a former employer is not the same as active employer coverage. If you retire and accept retiree benefits, you cannot use those benefits to defer Part B enrollment. Enroll in Part B when you retire.
- Assuming COBRA protects you: As discussed elsewhere, COBRA continuation coverage is not active employer coverage for Medicare purposes. Taking COBRA instead of enrolling in Part B can trigger the permanent late enrollment penalty.
- Missing the 8-month SEP window: Once your qualifying active coverage ends, you have 8 months. Missing that window means waiting for the General Enrollment Period (January 1 through March 31 each year), with a late enrollment penalty and coverage that does not begin until July 1.
- Failing to verify employer size: Many people assume they know how many people their employer has. If your company is borderline (near 20 employees), verify the actual count with HR. The threshold matters enormously for which insurance pays first.
Part A: A Separate and Simpler Question
Part A (hospital insurance) is usually premium-free if you have worked at least 40 quarters (10 years) and paid Medicare taxes. Most people enroll in Part A at 65 even while still working, because there is no cost and it provides hospital coverage. The main exception: if you have an HSA (Health Savings Account), enrolling in Part A makes you ineligible to make new HSA contributions. Consult a tax or benefits advisor if this applies to you.
When to Call for Help
Employer coverage and Medicare coordination is one of the most complicated areas of Medicare enrollment. The rules around employer size, primary vs. secondary payer, and the SEP window have significant long-term financial consequences. Insurance Innovators LLC can help you think through your specific situation. Call us at (530) 395-5309 before you make any enrollment decision while still employed.