Medicare and Working Past 65: What to Know

More people are working past age 65 than ever before, and that raises an important question: what happens with Medicare if you’re still employed? The answer depends largely on the size of your employer and the coverage you already have.

If you have coverage through a larger employer

If you or your spouse are still working and you have health insurance through an employer with 20 or more employees, you may be able to delay enrolling in Part B without a late penalty. In this situation, your employer coverage generally pays first and Medicare pays second. Many people in this position still enroll in premium-free Part A because it usually has no cost.

If you work for a smaller employer

If your employer has fewer than 20 employees, Medicare typically pays first. One exception: if your small employer participates in a multi-employer plan where at least one participating company has 20 or more employees, the group plan is usually primary anyway. In that case, it’s usually important to enroll in Part B when you’re first eligible, because delaying could leave gaps in your coverage. Check with your employer’s benefits administrator to understand how your plan works with Medicare.

Avoiding the Part B late penalty

If you delay Part B because you have qualifying employer coverage, you’ll generally get a Special Enrollment Period to sign up without a late penalty. That window runs for eight months from whichever comes first: the month your employment ends, or the month your group health coverage ends.

COBRA does not extend this window. COBRA is not considered coverage based on current employment, so it neither creates a Part B Special Enrollment Period nor pauses the eight-month clock. People who take COBRA and wait for it to run out before enrolling routinely miss the window entirely and pay a penalty for the rest of their lives. Retiree coverage works the same way.

If you don’t have qualifying coverage and delay, the penalty is 10% of the standard premium for each full 12-month period you could have had Part B but didn’t, and you pay it for as long as you have Part B. Someone who delayed 24 months would pay 20% above the 2026 standard premium of $202.90 — an extra $40.58, for a total of $243.48 per month, permanently.

A note on Health Savings Accounts

Once you enroll in any part of Medicare — including premium-free Part A — you can no longer contribute to an HSA. If you’re contributing to an HSA and plan to keep doing so, this is an important factor to weigh before enrolling.

There’s a trap here that catches people every year. When you sign up for Medicare after 65, Part A coverage is backdated up to six months (never earlier than the month you turned 65). The IRS treats that retroactive period as Medicare enrollment, which means any HSA contributions you made during it become excess contributions — subject to income tax plus a 6% excise tax each year until you correct them.

The practical rule: stop HSA contributions six months before you apply for Medicare or Social Security. If you’ve already over-contributed, you can withdraw the excess plus its earnings without penalty if you do it by your tax return due date, including extensions.

You can still spend existing HSA funds tax-free after enrolling, including on Medicare premiums. And if your spouse has their own HSA and isn’t on Medicare, their contributions aren’t affected.

Prescription drug coverage

If your employer coverage includes creditable prescription drug coverage, you can usually delay Part D without penalty. Keep the notice your employer sends about whether your drug coverage is creditable, since you may need it later.

Note that the Part D clock is much shorter than the Part B one. Going 63 or more consecutive days without creditable drug coverage triggers a penalty of 1% of the national base beneficiary premium ($38.99 in 2026) for every month you went without — and like the Part B penalty, you pay it for as long as you have coverage. Don’t apply the eight-month Part B mental model here.

Deciding when to enroll while still working can be one of the trickier parts of Medicare. Reviewing your specific employer coverage before you turn 65 can help you avoid penalties and coverage gaps.

Sources: Medicare.gov, CMS.gov, IRS Publication 969.

We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

This content is for general educational purposes and is not a complete description of benefits. Contact the plan for more information. Medicare Compare Agency, 2201 Providence Park, #150, Birmingham, Alabama 35242.