Turning 65 and Still Working: Your Complete Medicare Guide

Turning 65 while still employed is one of the most confusing Medicare situations you can face. Should you enroll? Can you delay? What happens to your employer coverage? And what about your HSA?

These are among the most common Medicare questions we hear, and getting them wrong can cost you thousands of dollars in penalties or leave you without proper coverage. This guide walks you through exactly what to do when you're turning 65 and still working.

Do I Need Medicare at 65 If I'm Still Working?

The short answer: it depends on your employer's size and the type of coverage you have. Many people assume they can simply keep their employer insurance and skip Medicare entirely. That assumption can lead to coverage gaps and permanent penalties.

The critical factor is whether your employer has 20 or more employees. This determines which insurance pays first (called "primary" coverage) and whether you can safely delay Medicare enrollment.

The 20-Employee Rule Explained

The 20-employee rule is the foundation of Medicare coordination with employer coverage. Understanding it correctly is essential to making the right enrollment decision.

How Employees Are Counted

The count is based on current employees (not historical numbers) for each day of at least 20 calendar weeks in the current or preceding year. Both full-time and part-time employees count toward this number.

If Your Employer Has 20+ Employees

When you work for a larger employer (20 or more employees):

• Your employer coverage pays first (is "primary")
• Medicare would pay second if you had it
• You can delay Part B enrollment without penalty while you have this coverage
• You'll get a Special Enrollment Period when the coverage or employment ends

If Your Employer Has Fewer Than 20 Employees

Smaller employers change the equation completely:

• Medicare is primary (pays first)
• Your employer coverage pays second
• If you don't have Medicare, your employer plan may deny or reduce claims
• Delaying enrollment will result in late penalties

Multi-Employer Situations

If you have coverage through your spouse's employer, the same 20-employee rule applies to their employer. If you're covered through multiple employers or a union plan, the largest employer's count typically determines coordination rules. When in doubt, ask the plan administrator.

Should You Enroll in Part A?

Part A (hospital insurance) has different considerations than Part B. For most people, Part A is premium-free if you or your spouse paid Medicare taxes for at least 40 quarters (10 years).

Automatic Enrollment

If you're already receiving Social Security benefits when you turn 65, you'll be automatically enrolled in Part A. There's no way to decline it while receiving Social Security.

When Free Part A Makes Sense

Since Part A is typically free, many people enroll in it even while working. Part A can serve as secondary coverage, potentially paying for hospital costs your employer plan doesn't cover.

Strategy for HSA Holders

If you want to maximize HSA contributions:

• Don't start Social Security before age 65 (to avoid automatic Part A enrollment)
• Delay enrolling in Part A until you're ready to stop HSA contributions
• Stop HSA contributions at least 6 months before you want Part A coverage to begin
• Be aware that Part A is retroactive up to 6 months when you do enroll

The Part B Decision: Enroll or Delay?

Part B (medical insurance) is where the big decisions happen. Unlike Part A, Part B has a monthly premium ($185/month in 2025 for most people), and the late enrollment penalty is permanent.

When You Can Safely Delay Part B

You can delay Part B enrollment without penalty if you have:

• Coverage through your current employer (or spouse's employer) with 20+ employees
• You're actively working (not retired)
• The coverage qualifies as "creditable" (at least as good as Medicare)

When You Should NOT Delay Part B

• Your employer has fewer than 20 employees
• You have COBRA coverage (not the same as active employer coverage)
• You have retiree coverage from a former employer
• You're self-employed with individual market insurance

HSA Rules and Medicare: Critical Information

Health Savings Accounts offer significant tax advantages, but they have strict rules about Medicare compatibility. Understanding these rules is crucial for anyone turning 65 while still working.

The Fundamental Rule

You cannot contribute to an HSA if you're enrolled in any part of Medicare. This includes Part A, Part B, Part D, or Medicare Advantage. Once you enroll, you must stop contributions immediately.

The Retroactive Part A Problem

When you sign up for Part A (or start Social Security after 65), coverage can be retroactive up to 6 months. This creates a problem: any HSA contributions made during those retroactive months become ineligible.

Example: You apply for Part A in December. Your coverage could be retroactive to June. Any HSA contributions you made from June through December would be considered excess contributions, subject to a 6% penalty per year until corrected.

How to Protect Your HSA

1. Stop HSA contributions at least 6 months before you plan to enroll in Part A or start Social Security
2. If you're already 65 and receiving Social Security, you're already enrolled in Part A and cannot contribute
3. Consider contributing extra before you stop to max out your account
4. Remember: you can still USE HSA funds for Medicare premiums and qualified expenses even after you stop contributing

COBRA and Retiree Coverage: Common Traps

Two types of coverage consistently confuse people turning 65: COBRA and retiree health benefits. Neither qualifies as "current employer" coverage for Medicare purposes.

COBRA Is Not Creditable Coverage

COBRA allows you to continue employer coverage after leaving a job, but it does NOT protect you from Medicare late enrollment penalties. The moment you go on COBRA:

• You're no longer "actively employed" for Medicare purposes
• Medicare becomes primary
• You should enroll in Medicare Parts A and B
• COBRA often costs more than Medicare anyway

Retiree Coverage Is Not Creditable Either

Some employers offer health benefits to retirees. While valuable, this coverage:

• Does NOT qualify as current employment coverage
• Does NOT allow you to delay Medicare without penalty
• Often expects you to have Medicare and pays secondary
• May drop you if you don't enroll in Medicare

What About Spouse's Employer Coverage?

If you're covered under your spouse's employer health plan, the same rules apply, with one important requirement: your spouse must be actively working.

When Spouse's Coverage Counts

Your spouse's employer coverage qualifies for delaying Medicare if:

• The employer has 20+ employees
• Your spouse is currently employed (not retired)
• You're covered under their active group health plan

Each Spouse Decides Separately

Medicare decisions are individual. If you're both approaching 65:

• Each person evaluates their own situation when they turn 65
• One spouse can enroll while the other delays
• If the working spouse retires, both may need to enroll in Medicare
• Both get Special Enrollment Periods when the coverage ends

Step-by-Step: What to Do When Turning 65

Here's your action plan for navigating Medicare while still employed:

1. Verify your employer size: Ask HR if your employer (or your spouse's employer if you're on their plan) has 20 or more employees. Get this in writing if possible.
2. Request a creditable coverage letter: Ask your employer for a letter confirming your current coverage is "creditable" and stating the employer size. Keep this letter safe.
3. Decide on Part A: If you have an HSA, decide whether the tax benefits of continued HSA contributions outweigh having Part A. If you don't have an HSA and qualify for premium-free Part A, there's little reason to delay.
4. Decide on Part B: If your employer has 20+ employees and you want to keep your current coverage, you can delay Part B. If under 20 employees, enroll in Part B.
5. Mark your calendar: Note when your coverage or employment will end. You have an 8-month Special Enrollment Period starting that date.
6. Consider Part D: If your employer drug coverage is creditable, you can delay Part D. Get a creditable coverage letter annually and save it.
7. Plan for retirement: When employment ends, you'll need to quickly enroll in Medicare. Have a plan ready for whether you'll choose Original Medicare with a Medigap policy or Medicare Advantage.

Common Questions

What if I work part-time?

Part-time work still counts as "current employment" for Medicare purposes, as long as you're covered by the employer's group health plan and the employer has 20+ employees. Hours worked don't affect the 20-employee rule.

What if my employer has multiple locations?

Employee count is based on the entire company, not individual locations. A company with 10 employees at each of three locations has 30 total employees and qualifies as a 20+ employer.

Can I have both Medicare and employer insurance?

Yes. Many people keep both. With a 20+ employee employer, your employer plan pays first and Medicare pays second. This can reduce your out-of-pocket costs. With an under-20 employer, Medicare pays first and your employer plan pays second.

What happens when I retire?

When you stop working or your coverage ends (whichever comes first), you get an 8-month Special Enrollment Period to sign up for Medicare Parts A and B without penalty. Don't delay; use this period to ensure continuous coverage.

Your Action Plan

Here's a quick summary of what to do:

• ☑ Confirm your employer's employee count (20+ or under 20)
• ☑ Get creditable coverage letters for both health and drug coverage
• ☑ If you have an HSA, plan your contribution stop date 6 months before Medicare
• ☑ Enroll in Part A unless you're maximizing HSA contributions
• ☑ For Part B: Delay if 20+ employees, enroll if under 20
• ☑ Understand that COBRA and retiree coverage don't protect you from penalties
• ☑ Set calendar reminders for your Special Enrollment Period
• ☑ Research your post-retirement options now: Original Medicare + Medigap or Medicare Advantage