Medicare vs. Employer Coverage at 65

The 20-employee rule

The single most important factor is your employer's size, because it decides which insurance pays first.

• 20 or more employees: your group health plan can remain primary, and Medicare is secondary. You can delay Part B without a penalty and enroll later through a Special Enrollment Period when you stop working.
• Fewer than 20 employees: Medicare is usually primary, meaning it pays first and the group plan pays second. If you do not enroll in Part B on time, you can be left largely uncovered, so you generally should enroll during your Initial Enrollment Period.

This rule looks at the size of the employer providing the coverage — yours or your spouse's. When in doubt, ask your benefits administrator in writing whether the plan is primary or secondary to Medicare.

When to delay Part B vs. enroll

At a large employer with creditable group coverage, many people keep Part A (it is usually premium-free) and delay Part B to avoid paying the $202.90 monthly premium for coverage they may not yet need. At a small employer, delaying Part B is risky because Medicare expects to be your primary payer. There is no universally right answer — compare your group plan's cost and benefits against Medicare before deciding.

The Special Enrollment Period when you stop working

If you delayed Part B while covered by active employment, you get a Special Enrollment Period (SEP) of eight months that begins when the employment or the group coverage ends. Enrolling within this window avoids the Part B late-enrollment penalty. Do not wait the full eight months, though — sign up before your group coverage lapses so you have no gap.

The HSA and Medicare conflict

Health savings accounts and Medicare do not mix. Once you are enrolled in any part of Medicare — including premium-free Part A — you can no longer make HSA contributions. Because applying for Social Security at or after 65 can make Part A retroactive up to six months, the common guidance is to stop HSA contributions about six months before you apply for Social Security or Medicare to avoid a tax penalty on excess contributions.

COBRA is not creditable coverage for Part B

This trips up many people. COBRA does not count as active employer coverage for Part B. It does not delay your enrollment deadline and it does not create a Special Enrollment Period. If you turn 65 and lean on COBRA instead of enrolling in Part B, you can end up with a lifelong penalty and a coverage gap. The same caution applies to retiree health plans. To map your dates, see our Medicare enrollment timeline, and browse the rest of the turning 65 hub for next steps.