Can You Get Medicare While Still Working? A Complete Guide
Turning 65 while actively employed is a common scenario that brings up a critical question: can you get Medicare if you are still working? The short answer is yes, but the longer answer involves navigating a complex set of rules, enrollment periods, and coordination with your employer coverage. Making the wrong choice can lead to lifelong penalties and gaps in your healthcare. This guide will walk you through the key considerations, from eligibility and enrollment timing to the pros and cons of delaying Part B, ensuring you make an informed decision that protects your health and finances.
Understanding Medicare Eligibility at Age 65
Medicare eligibility is primarily based on age. You become eligible for Medicare when you turn 65, regardless of whether you are retired or still working. This eligibility is automatic if you are already receiving Social Security or Railroad Retirement Board benefits. If you are not yet receiving benefits, you will need to proactively enroll during your Initial Enrollment Period (IEP). Your IEP is a seven-month window that begins three months before the month you turn 65, includes your birthday month, and ends three months after. During this time, you can sign up for Medicare Part A (hospital insurance) and Part B (medical insurance).
It is crucial to understand that eligibility and enrollment are two separate steps. Being eligible does not mean you are automatically enrolled if you are still working. You must take action. For many, the decision hinges on the size of their employer and the quality of their current group health plan. The rules differ significantly depending on whether your employer has 20 or more employees, or fewer than 20. This distinction is the cornerstone of your Medicare planning strategy.
Medicare Part A and Part B: To Enroll or Delay?
For most people, enrolling in Medicare Part A at 65 is a straightforward decision. Part A is usually premium-free if you or your spouse paid Medicare taxes for at least 10 years (40 quarters). Since it costs nothing for most, enrolling in Part A can provide valuable secondary coverage to your employer plan, potentially covering costs like hospital deductibles. However, there is an important caveat: if you have a Health Savings Account (HSA), enrolling in any part of Medicare, including Part A, disqualifies you from making further HSA contributions. You must stop contributions at least six months before your Part A start date to avoid tax penalties.
The decision regarding Part B is more complex. Part B comes with a monthly premium (standard premium is $174.70 for 2024, with higher-income adjustments). If you have qualifying employer coverage through a large employer (20+ employees), you can generally delay Part B without penalty. Your employer plan becomes the primary payer, and Medicare would be secondary. This can be a cost-effective strategy to avoid paying the Part B premium while maintaining comprehensive coverage. Our detailed resource on Navigating Medicare 65 Still Working Options for Coverage explores these coordination of benefits rules in greater depth.
If your employer has fewer than 20 employees, the rules flip. Medicare typically becomes the primary payer, and your employer plan becomes secondary. In this case, delaying Part B can leave you with significant coverage gaps, as your small employer plan may not pay for services that Medicare would have covered first. Furthermore, you could face a late enrollment penalty for Part B, a 10% increase in your premium for each 12-month period you were eligible but didn’t sign up. This penalty lasts for as long as you have Part B.
Special Enrollment Periods and Avoiding Penalties
The key to delaying Medicare without penalty is your Special Enrollment Period (SEP). This is an eight-month window that begins the month after your employment ends or your group health coverage ends, whichever happens first. You can use this SEP to sign up for Part B without incurring the late enrollment penalty. It is vital to maintain what Medicare considers “creditable” coverage, which is health insurance that is as good as or better than Medicare. Most large employer group plans meet this standard.
To use the SEP correctly, you must have had coverage through current employment (your own, a spouse’s, or a family member’s) continuously since you turned 65. COBRA coverage and retiree health plans do NOT count as current employment for SEP purposes. If you delay Part B based on COBRA, you will not qualify for an SEP and will face penalties. You must enroll during your Initial Enrollment Period if your only coverage after employment ends is COBRA. For a precise timeline on when to act, refer to our article on When to Sign Up for Medicare If Still Working.
To ensure you are making the right choice, follow these steps when approaching 65:
- Contact your employer’s benefits administrator. Ask for a written letter stating whether your health plan is creditable coverage per Medicare’s standards. Get clear answers on the number of employees and how your plan coordinates with Medicare.
- Evaluate your plan’s costs and coverage. Compare your employer plan’s premiums, deductibles, copays, and network against Medicare’s offerings (Original Medicare plus a Part D plan and potentially a Medigap policy, or a Medicare Advantage plan).
- Consider your long-term plans. Are you planning to work for several more years, or might you retire soon? Your timeline affects the delay decision.
- Decide on HSA contributions. If you wish to keep contributing to an HSA, you must delay enrolling in any part of Medicare.
- Mark your calendar for critical deadlines, including your IEP and, if delaying, the potential start of your SEP.
Medicare Advantage and Part D While Working
If you decide to enroll in Medicare Part A and Part B while still working, you have the same options as any Medicare beneficiary: you can stay with Original Medicare (and add a standalone Part D prescription drug plan and a Medigap supplement) or join a Medicare Advantage (Part C) plan. However, if you have employer coverage, you need to be very careful. Most employer plans will not coordinate benefits with a Medicare Advantage plan. This means if you join a Medicare Advantage plan, your employer coverage may automatically terminate. You should never enroll in a Medicare Advantage plan without first confirming with your employer’s benefits administrator that it is permissible and understanding how the two interact.
Similarly, if you delay Part B, you cannot enroll in a Medicare Advantage plan, as they require both Part A and Part B. For prescription drug coverage, you must ensure your employer plan includes “creditable” prescription drug coverage. If it does not, and you go 63 days or more without creditable coverage after your IEP ends, you will face a Part D late enrollment penalty when you eventually sign up. Your employer should provide a notice each year stating whether its drug coverage is creditable.
Frequently Asked Questions
Q: I am 65, still working, and have great employer coverage. Do I need to do anything with Medicare?
A> You should at least enroll in premium-free Part A, as it can act as secondary coverage. You can likely delay Part B without penalty. The critical step is to confirm with your employer that your plan is creditable and has 20 or more participants.
Q: What happens if I don’t sign up for Part B when I’m first eligible and I don’t have creditable coverage?
A> You will incur a lifelong late enrollment penalty for Part B. Your monthly Part B premium will increase 10% for each full 12-month period you could have had Part B but didn’t.
Q: Can I have both my employer HSA and Medicare?
A> No. You cannot contribute to an HSA if you are enrolled in any part of Medicare (A, B, C, or D). You can use existing HSA funds tax-free for qualified medical expenses, but you must stop contributions at least six months before your Medicare start date.
Q: How does Medicare work with my employer’s dental and vision plan?
A> Original Medicare does not cover routine dental or vision care. Your employer’s ancillary plans for these services can be very valuable and continue to work alongside Medicare. They do not affect your Medicare enrollment decisions.
Q: I am covered under my spouse’s employer plan. Do the same rules apply?
A> Yes. Coverage under a spouse’s employer plan (if the employer has 20 or more employees) is treated the same as if it were your own for the purpose of delaying Part B without penalty.
Navigating Medicare while employed requires careful planning and verification. The consequences of making an incorrect assumption about your employer’s plan size or creditable coverage status can be costly and permanent. Always get information in writing from your employer’s benefits administrator and consider consulting with a licensed Medicare advisor. By understanding the rules around enrollment periods, penalties, and coordination of benefits, you can confidently make the choice that provides seamless, affordable healthcare during your working years and into a secure retirement. For more nuanced scenarios, exploring resources on Medicare options at 65 and understanding specific enrollment timelines is highly recommended.
