Key Takeaways

• If you’re turning 65 soon and still working, delaying Medicare Part B could save you money, but only if your current employer coverage qualifies.

• Missing your Special Enrollment Period after you stop working could result in lifelong late penalties and delayed coverage.

Turning 65 While Still Employed: The Medicare Crossroads

If you’re 64 and approaching 65 while still working, you’re standing at a critical Medicare decision point. For many, Medicare eligibility begins at 65—but whether or not you should enroll right away depends on your current health coverage, your employment status, and your future retirement plans.

Understanding your options now ensures you won’t overpay later—or get hit with penalties for enrolling too late.

When You’re Automatically Enrolled

If you’re already receiving Social Security or Railroad Retirement Board benefits, you’ll be automatically enrolled in Medicare Part A and Part B when you turn 65. However, many people who are still working delay taking Social Security, so automatic enrollment doesn’t apply.

If you’re not receiving those benefits, you need to actively enroll in Medicare during your Initial Enrollment Period (IEP).

What Is the Initial Enrollment Period?

Your Initial Enrollment Period is a 7-month window that starts three months before the month you turn 65, includes your birthday month, and extends three months after.

If you don’t sign up for Medicare during this time—and you don’t have other credible coverage—you may face late enrollment penalties.

Should You Enroll in Medicare Part A at 65?

For most people, the answer is yes.

Medicare Part A is premium-free if you or your spouse paid Medicare taxes for at least 10 years. It covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services.

Even if you’re still working and have group health coverage, enrolling in Part A at 65 can provide additional hospital coverage at no extra monthly cost. But there’s a catch.

If you’re contributing to a Health Savings Account (HSA), enrolling in Part A disqualifies you from making further HSA contributions. You’ll need to stop contributing six months before enrolling in Medicare to avoid IRS penalties.

Should You Delay Part B If You’re Still Working?

This decision depends entirely on the size and structure of your employer’s health plan:

• If your employer has 20 or more employees, your group plan is considered creditable coverage. You can delay enrolling in Part B without penalty and sign up later during a Special Enrollment Period (SEP).

• If your employer has fewer than 20 employees, Medicare becomes your primary insurance. In this case, you should enroll in Part B during your Initial Enrollment Period to avoid coverage gaps and penalties.

Special Enrollment Period Rules

If you delay Medicare Part B because you’re still working and covered by a group health plan, you’ll get a Special Enrollment Period when that employment or coverage ends.

• This SEP lasts eight months from the time your group coverage ends or you stop working—whichever comes first.

• During this time, you can enroll in Part B without incurring a late enrollment penalty.

• Your coverage starts the month after you enroll.

Failing to enroll during this SEP means you’ll have to wait for the General Enrollment Period, which occurs from January 1 to March 31 each year, with coverage starting July 1. That gap in coverage—and the lifetime penalty—can be financially painful.

Understanding Late Enrollment Penalties

The Medicare Part B late enrollment penalty is not a one-time fee. It’s a permanent increase in your monthly premium. For every 12-month period you could have had Part B but didn’t, your premium increases by 10%.

This penalty is applied for as long as you have Part B—which, for many, means for life.

That’s why it’s so important to have a clear understanding of whether your current employer coverage counts as creditable.

Coordination of Benefits: Medicare vs. Employer Plan

If you’re 65 and still working, you may be wondering how Medicare interacts with your employer plan. This depends on the size of your employer:

• Large employer (20+ employees): Your group health plan pays first, and Medicare pays second.

• Small employer (<20 employees): Medicare pays first, and the employer plan pays second (if at all).

Knowing which plan pays first helps you decide whether you need Medicare right now or can safely delay it.

The HSA Consideration: Don’t Overlook It

Health Savings Accounts can be a valuable tool for retirement planning, but Medicare and HSAs don’t mix.

If you enroll in any part of Medicare, you are no longer eligible to contribute to an HSA. Here’s how to time it correctly:

• Stop HSA contributions at least six months before you apply for Medicare.

• That’s because Part A is retroactive up to six months, as long as you’re eligible.

Failing to follow this timeline could result in tax penalties and additional complications during tax filing.

What About Spouses and Dependents?

Your Medicare decision at 65 doesn’t directly affect your spouse or dependents who are covered by your employer plan. However, if you drop your employer coverage to switch to Medicare, your family members might lose access to health insurance if they’re on your plan.

You may need to explore options like COBRA, ACA Marketplace plans, or separate employer coverage for your dependents.

Can You Enroll in a Medicare Advantage or Supplement Plan Now?

You are allowed to enroll in a Medicare Advantage plan or purchase a Medigap policy once you’re enrolled in both Part A and Part B. However, if you delay Part B while working, these options are also delayed.

Once you leave your job and activate your SEP, you can enroll in:

• A Medicare Advantage plan

• A stand-alone Part D prescription drug plan

• A Medicare Supplement (Medigap) plan

Keep in mind: if you miss your Medigap open enrollment window (the 6 months after enrolling in Part B), you may be subject to medical underwriting in the future.

Employer Plan Changes at Age 65

Some employers change your group coverage once you turn 65, even if you’re still working. For instance, they may require that you enroll in Medicare to continue receiving certain benefits or coordinate prescription coverage differently.

You should talk to your HR or benefits office at least 90 days before your 65th birthday to understand how your plan interacts with Medicare. Don’t assume it remains unchanged.

How Prescription Drug Coverage Fits In

Medicare Part D (for prescription drugs) is optional—but penalties apply if you don’t have creditable prescription drug coverage once you’re eligible.

• If your employer plan offers drug coverage that’s at least as good as Part D, you can delay enrolling in Medicare drug coverage.

• If it’s not creditable—or you lose it—you must enroll in Part D within 63 days to avoid late penalties.

This penalty is 1% of the national base premium for every month you go without creditable coverage.

Timing is Everything

Here’s a simple breakdown to help keep your timeline straight:

• Age 64 years and 9 months: Start reviewing your Medicare options.

• Three months before 65: Initial Enrollment Period begins.

• At 65: Consider enrolling in Part A. Delay Part B only if you have creditable employer coverage.

• When leaving your job: Use your 8-month Special Enrollment Period to sign up for Part B (and other parts, if needed).

• Within 63 days of losing creditable drug coverage: Enroll in Part D to avoid penalties.

Every one of these dates matters—and missteps can be costly.

Staying Employed and Medicare: What You Should Prioritize

At 64, you have the advantage of time. Use it wisely by:

• Reviewing your employer health benefits in detail.

• Confirming whether your coverage is creditable for Parts B and D.

• Timing your HSA contributions and Medicare enrollment carefully.

• Preparing documents needed for SEP enrollment, such as proof of coverage.

Proactivity can save you thousands of dollars over your retirement.

Smart Planning Today Can Prevent Medicare Penalties Tomorrow

Delaying Medicare while working is entirely possible—but only if you understand the rules. You must be confident that your current coverage qualifies as creditable and that you enroll in the right parts of Medicare at the right time.

Avoid confusion, penalties, or coverage gaps by planning ahead. If you have questions about your situation or need help navigating enrollment timelines, get in touch with a licensed agent listed on this website for personal assistance.