Working Past 65 and Medicare: What You Need to Know

Turning 65 while still employed puts you in a different enrollment lane than someone who retires at the standard age. The rules are straightforward once you understand them, but the consequences of getting them wrong — permanent premium surcharges, coverage gaps, tax penalties — last for the rest of your life.

The core question: does your employer have 20 or more employees? That single number determines whether you can safely delay Medicare or whether you need to enroll immediately.

The 20-Employee Rule

If your employer (or your spouse's employer) has 20 or more employees, your group health plan is the primary payer and Medicare is secondary. In this case:

• You can delay Medicare Part B without penalty
• You keep your employer coverage as your primary insurance
• You get an 8-month Special Enrollment Period (SEP) to sign up for Part B after you retire or lose group coverage — whichever happens first
• No late enrollment penalty applies during your SEP

If the employer has fewer than 20 employees, Medicare becomes primary at age 65 regardless of your employment status. In this situation, you must enroll in Part B during your Initial Enrollment Period or face the late penalty. Your employer plan pays secondary — covering the 20% that Medicare doesn't — but it expects Medicare to be active.

What to Enroll In and What to Delay

Enroll in Part A immediately. If you qualify for premium-free Part A (40 or more work credits), there's almost no reason to delay. Part A has no monthly premium, and it provides hospital coverage that works alongside your employer plan. The one exception: if you're contributing to a Health Savings Account (see the HSA section below).

Delay Part B if your employer plan covers you. Part B costs $202.90 per month in 2026 at the standard rate. If your employer plan is already covering outpatient care, doctor visits, and preventive services, paying for Part B duplicates that coverage at your own expense.

Delay Part D if your employer drug coverage is creditable. Ask your employer's benefits administrator whether your prescription drug coverage meets Medicare's "creditable coverage" standard — meaning it's at least as good as the standard Part D benefit. If it is, you can delay Part D without penalty. If it isn't, consider enrolling during your IEP to avoid a lifetime surcharge.

The Retirement Transition Timeline

When you're ready to retire, the clock starts immediately:

60 days before your last day of work:

1. Download CMS-L564 (Request for Employment Information) and CMS-40B (Application for Part B)
2. Fill out Section A of both forms
3. Send CMS-L564 to your HR department for Section B completion

45 days before retirement: 4. Follow up with HR to get the signed CMS-L564 back

30 days before retirement: 5. Submit both completed forms to your local Social Security field office 6. Request Part B to start the first day of your retirement month

First month of retirement: 7. Enroll in a Part D prescription drug plan within 63 days to avoid the Part D late penalty 8. During your 6-month Medigap Open Enrollment Period, select a Medicare Supplement plan (if choosing Original Medicare) — this is your only guaranteed-issue window without medical underwriting

The HSA Trap for Workers Over 65

This catches people who thought they could keep contributing to an HSA while working past 65. You cannot contribute to a Health Savings Account once you're enrolled in any part of Medicare — including premium-free Part A.

The danger: if you apply for Part A more than 6 months after turning 65, coverage is automatically backdated 6 months. Any HSA contributions made during that retroactive window become excess contributions, subject to a 6% excise tax penalty under IRS Code Section 4973.

If you want to keep contributing to your HSA past 65, do not enroll in Part A until you're ready to stop contributions. Once you do enroll, you'll need to withdraw any excess contributions and their earnings, then report the withdrawn amount as taxable income.

The 2026 IRS annual HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up contribution for those 55 and older.

When You Can't Delay: COBRA and Retiree Plans

COBRA continuation coverage and retiree health benefits do not count as coverage based on active employment. If you leave your job and elect COBRA, your 8-month Special Enrollment Period started the day your active employment ended — not the day COBRA runs out.

This is the single most expensive mistake in Medicare enrollment. Someone who stays on 18-month COBRA without enrolling in Part B blows past their SEP entirely. They must wait for the next General Enrollment Period (January through March), during which time they have no Medicare coverage at all, and they face a permanent 10% premium surcharge for every full year of delay.

Get the Complete Enrollment Toolkit

The Medicare Enrollment Guide includes the full employer-to-Medicare transition timeline, pre-annotated CMS-L564 and CMS-40B instructions, HSA coordination worksheets, and penalty calculators for every enrollment scenario.

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