Turning 65 while you’re still working raises a question with no one-size answer: do you take Medicare now, keep your employer plan, or both? The right move depends on how big your company is, whether you have a health savings account, and what each option actually costs you.
Company size changes everything
The single most important factor is how many people your employer has. Medicare uses this to decide which plan pays your bills first.
- 20 or more employees: Your group health plan pays primary, and Medicare pays second. Because your job-based coverage is doing the heavy lifting, you can usually delay Part B without a late penalty and pick it up later.
- Fewer than 20 employees: Medicare usually pays primary, and your group plan pays second. In this case you most likely need Part B at 65, because your employer plan assumes Medicare is covering its share — and if you don’t have it, you could be stuck with large bills.
If you’re not sure which rule applies to you, your HR or benefits office can confirm the employer’s size and how the plan coordinates with Medicare. You can also check your timing with the Eligibility Calculator to see exactly when your enrollment window opens.
Almost everyone still takes Part A
Even when you delay Part B, most people sign up for Part A at 65. Here’s why: if you (or your spouse) worked and paid Medicare taxes for at least 10 years, Part A costs $0 in premiums. It quietly backs up your employer plan for inpatient hospital stays at no monthly cost.
There’s one big exception, and it’s important.
The HSA trap
If you contribute to a health savings account, pause before enrolling in anything. Here’s the rule: enrolling in any part of Medicare — including free Part A — stops you from making new HSA contributions.
That catches a lot of people off guard. They sign up for “free” Part A at 65, not realizing it ends their HSA eligibility for the rest of the year. A few things worth knowing:
- You can still use the money already in your HSA, including to pay Medicare premiums and other qualified costs.
- If you plan to keep contributing to your HSA, you may want to delay Part A (which you can do only if you also delay Social Security, since starting Social Security automatically enrolls you in Part A).
- HSA and Medicare timing has real tax consequences, so it’s smart to talk with a tax advisor about your specific situation before you decide.
If keeping your HSA matters to you, this is the detail that should drive your timing.
What happens when you retire
When your active employer coverage ends, the clock starts. Losing that coverage triggers an 8-month Special Enrollment Period (SEP) to sign up for Part B — and as long as you enroll within that window, you avoid the Part B late penalty entirely.
A few cautions here:
- The 8 months count from when your active employment or group coverage ends, whichever comes first — not from some later date.
- COBRA, retiree plans, and VA benefits do not count as active employer coverage for this purpose. If you’re relying on COBRA after you stop working, your SEP is already running, and waiting too long can cost you.
- The Part B late penalty isn’t a one-time fee. It adds 10% to your premium for each full 12 months you could have had Part B but didn’t — and it sticks for as long as you have Part B.
Because that penalty is permanent, it’s worth seeing the real cost before you risk it. The Late Enrollment Penalty Calculator shows you what a delay would add to your premium each month.
Weighing the cost
Sometimes the math favors Medicare even while you’re working. Compare your share of the employer premium and its deductibles against the standard Part B premium of $202.90 a month plus a Medicare plan. If your job-based coverage is expensive or thin, moving to Medicare (often paired with a Medicare Advantage or Medigap plan) may save you money. If your employer plan is generous and heavily subsidized, keeping it usually wins.
There’s no universal answer — it comes down to your plan, your premiums, and whether an HSA is in the picture.
A quick way to decide
Working past 65 gives you options, and that’s a good thing. Run the numbers, check your employer’s size, and mind the HSA and SEP rules so a small timing mistake doesn’t turn into a lasting penalty. If you’d like a second set of eyes on whether to take Medicare now or hold off, reach out for a no-pressure call — talking it through for your specific situation usually makes the choice clear.