Key Takeaways

• Medicare enrollment rules are highly time-sensitive, and failing to coordinate with your current insurance can result in late enrollment penalties and gaps in coverage.

• Some employer or retiree insurance plans change or end altogether once you enroll in Medicare, especially after age 65. Understanding which plan pays first is critical.

The Overlap Between Employer Insurance and Medicare

If you’re approaching retirement age, one of the most important steps you can take is to understand how your existing insurance will interact with Medicare. Whether you’re covered by an employer plan, retiree insurance, COBRA, or a union-sponsored plan, Medicare has specific rules about how these types of coverage coordinate.

At age 65, you’re generally eligible for Medicare. But that doesn’t automatically cancel out other coverage. Instead, both plans might work together—or not at all—depending on your employment status, the size of your employer, and the type of insurance you hold.

Coordination of Benefits: Who Pays First?

Medicare uses Coordination of Benefits (COB) rules to determine who pays first:

• If you are still working and your employer has 20 or more employees, your employer insurance pays first, and Medicare is secondary.

• If your employer has fewer than 20 employees, Medicare pays first, and your employer plan is secondary.

• If you’re retired, Medicare typically pays first, and your retiree plan pays second—if it still applies at all.

Understanding this order is critical. If you delay Medicare enrollment because you mistakenly believe your employer or retiree coverage is enough, you could face late penalties and a gap in coverage.

Timing Your Medicare Enrollment Correctly

You have a limited window to enroll in Medicare without penalties:

• Initial Enrollment Period (IEP): Begins 3 months before your 65th birthday, includes your birth month, and ends 3 months after. This 7-month window is your first chance to enroll in Medicare Parts A and B.

• Special Enrollment Period (SEP): If you’re working and have employer coverage, you can delay Part B and sign up within 8 months after you stop working or lose coverage—whichever happens first.

• General Enrollment Period (GEP): Runs from January 1 to March 31 each year if you miss your IEP and don’t qualify for an SEP. Coverage begins July 1, and you may owe penalties.

The takeaway? Don’t assume your insurance provider will remind you to enroll. Medicare enrollment is your responsibility.

What Happens to Employer Insurance After Enrolling in Medicare

Not all plans continue in the same way once you enroll in Medicare:

• Active employee plans may require you to sign up for Medicare to remain covered or may reduce benefits for Medicare-eligible employees.

• Retiree coverage often becomes secondary once Medicare begins. Some retiree plans may terminate altogether when Medicare coverage begins.

• COBRA coverage does not count as creditable coverage for delaying Medicare Part B. You should enroll in Medicare Part B when first eligible even if you have COBRA.

Failing to coordinate these transitions can result in sudden coverage losses or denied claims. Always contact your plan administrator before making decisions.

Understanding the Role of Medicare Parts A, B, and D

Medicare comes in parts, and each plays a specific role in replacing or complementing your current insurance.

Medicare Part A

• Covers inpatient hospital care.

• Most people get it premium-free if they or their spouse paid Medicare taxes for 40 quarters.

• Enrolling late generally doesn’t incur penalties, but delaying it may not help if your employer plan becomes secondary.

Medicare Part B

• Covers outpatient services like doctor visits, lab tests, and preventive care.

• Carries a monthly premium and an annual deductible ($185 and $257 respectively in 2025).

• Delaying enrollment without creditable coverage results in a permanent penalty—10% for each full 12-month period you were eligible but didn’t sign up.

Medicare Part D

• Covers prescription drugs.

• Creditable coverage from an employer or union can allow you to delay Part D. If your drug plan isn’t creditable, you must enroll to avoid penalties.

When Medicare Becomes Mandatory

Even if you’re still working, certain situations require you to enroll in Medicare:

• If you’re receiving Social Security or Railroad Retirement Board benefits, you are automatically enrolled in Part A and B at age 65.

• If your employer requires Medicare enrollment at 65 as a condition of keeping your health coverage.

• If you have a Health Savings Account (HSA) and want to continue contributing, you must stop HSA contributions six months before enrolling in Medicare Part A to avoid tax penalties.

Pitfalls of Dual Coverage Without Coordination

Enrolling in both Medicare and other coverage doesn’t automatically mean better protection. If the two aren’t properly coordinated, you might run into:

• Claim denials due to improper sequencing of benefits

• Unexpected out-of-pocket costs if one plan doesn’t pay and the other isn’t required to

• Coverage gaps if you assume a plan is primary but it isn’t

• Penalty exposure if you delay Medicare Parts B or D based on a non-creditable plan

To avoid these issues, speak with your employer’s benefits administrator or a licensed agent well in advance.

Retiree Plans, Union Plans, and Government Health Coverage

Different types of non-employer plans follow specific rules with Medicare:

• Retiree Plans: Usually become secondary to Medicare and may even drop coverage once Medicare begins.

• Union Health Plans: May coordinate with Medicare but often follow the same rules as retiree coverage.

• Veterans Affairs (VA): Medicare does not coordinate with VA benefits. You may choose which system to use for care, but Medicare won’t pay for VA services and vice versa.

• TRICARE for Life: Requires enrollment in both Medicare Part A and B to maintain full coverage.

Understanding What Qualifies as Creditable Coverage

Creditable coverage is insurance that is expected to pay as much as Medicare. This matters primarily for delaying enrollment in:

• Part B: Employer coverage from a large employer (20+ employees) qualifies.

• Part D: Most employer drug plans must notify you each year whether their coverage is creditable.

If your plan is not creditable and you delay enrollment, you will face penalties. These penalties are monthly and permanent for as long as you’re on Medicare.

The 2025 Medicare Enrollment Periods at a Glance

Stay mindful of these current timelines:

• Initial Enrollment Period (IEP): A 7-month window around your 65th birthday

• General Enrollment Period (GEP): January 1–March 31 (coverage starts July 1)

• Annual Enrollment Period (AEP): October 15–December 7 (for switching or joining plans)

• Special Enrollment Period (SEP): Triggered by loss of employer coverage or retirement

Use these timeframes to avoid penalties and ensure smooth coverage transitions.

Why You Should Review Your Coverage Before Retiring

A few months before you retire or turn 65, review your insurance options:

• Confirm whether your current coverage is considered creditable.

• Ask if your employer or retiree plan changes after you enroll in Medicare.

• Evaluate your costs with and without Medicare, including premiums, deductibles, and out-of-pocket maximums.

• Consider how Medicare works with supplemental coverage like Medigap.

• Make a checklist of deadlines and required documentation for enrollment.

Avoid Coverage Surprises by Planning Early

Retiring doesn’t automatically mean you’ll have uninterrupted or affordable coverage. Medicare offers many protections, but only when used correctly alongside your other insurance. By learning how Medicare coordinates with your current plan, enrolling on time, and asking the right questions early, you can avoid costly mistakes.

To discuss your specific situation, get in touch with a licensed agent listed on this website.