Signing up for Medicare while you're still working

If you're still working at 65 and covered by a health plan from an employer with 20 or more employees (yours or your spouse's), you can usually delay Part B without a penalty until that job or coverage ends. If the employer has fewer than 20 employees, Medicare usually pays first, so you should sign up for Parts A and B at 65.

That one rule decides most situations, but the details matter: COBRA, HSAs, retiree plans, VA and TRICARE coverage, and your spouse's age can all change the answer. Getting it wrong can mean a penalty that lasts for life, or months without coverage. Here's how it works.

Step 1: How big is your employer?

For people under 65 with Medicare because of a disability, the threshold is 100 or more employees. Ask your HR department in writing how the plan works with Medicare; small-employer plans can refuse to pay claims Medicare should have paid first.

Step 2: Should you take Part A anyway?

Part A (hospital insurance) is premium-free for most people who worked about 10 years, so many workers sign up for Part A at 65 even while delaying Part B. It can act as secondary coverage for hospital stays.

The exception is a Health Savings Account (HSA). Once you're enrolled in any part of Medicare, including Part A, you can no longer contribute to an HSA. If you want to keep contributing, you may need to delay Part A too, which also means delaying Social Security, since collecting Social Security enrolls you in Part A automatically.

The HSA rule that catches people out

When you sign up for Part A after turning 65, your coverage is backdated up to 6 months (but not earlier than your 65th birthday month). Any HSA contributions during those months become excess contributions, which can be taxed. Medicare.gov's advice: you and your employer should stop contributing to your HSA 6 months before you retire or apply for Social Security benefits. You can keep spending the money already in your HSA on qualified medical costs, including Medicare premiums.

Source: Medicare.gov, Working past 65.

Step 3: When your job or coverage ends

When you stop working, or lose your employer coverage if that happens first, you get a Special Enrollment Period:

• Part B: 8 months to sign up without a late penalty. Coverage starts the month after Social Security processes your form.
• Part D or Medicare Advantage: about 2 months after your coverage ends. Don't go more than 63 days without creditable drug coverage, or you'll owe a Part D penalty.
• Medigap: your six-month Medigap Open Enrollment starts the month your Part B begins, so delaying Part B while you work delays that window too. That's good news: you get your full no-health-questions window when you actually retire.

To sign up for Part B after 65, you file two forms with Social Security: CMS-40B (application for Part B) and CMS-L564 (your employer confirms your group coverage). Both can be submitted online. If your employer won't complete the L564, you can use other proof, such as pay stubs showing health premiums.

Tip: sign up one to two months before your employer coverage ends, so Medicare starts the day your work coverage stops, with no gap.

COBRA: the most expensive mistake

COBRA lets you keep your employer plan for up to 18 months after you leave, but it doesn't count as coverage from current work. Your 8-month Part B window starts when your job ends, not when COBRA ends. If you ride COBRA past those 8 months and then sign up, you can owe a lifetime Part B penalty and face a gap in coverage.

Once you have Medicare, COBRA usually pays second, and it can still be useful for a younger spouse or for dental and vision coverage.

What the Part B penalty costs

If you miss your window, Part B costs 10% more for each full 12 months you could have had it but didn't, for as long as you have Part B. Two years late, at the 2026 standard premium of $202.90, adds about $40.58 a month, for life. You'd also have to wait for the General Enrollment Period (January 1 to March 31) to sign up. See the turning-65 Medicare timeline for Part D penalties in dollars.

VA, TRICARE, federal and retiree coverage

• VA health care: doesn't count as employer coverage, so it doesn't let you delay Part B without a penalty. VA drug coverage does count as creditable for Part D.
• TRICARE: military retirees generally need Part A and Part B at 65 to keep TRICARE For Life, which then pays after Medicare.
• Federal employees (FEHB): if you're still actively employed, you can usually delay Part B. Retirees should compare FEHB with Medicare carefully before deciding.
• Retiree plans: most assume you have Parts A and B at 65 and pay only after Medicare. Some won't pay at all for what Medicare would have covered.
• ACA Marketplace plans: don't let you delay Part B, and once you're eligible for premium-free Part A you generally can't get premium tax credits for a Marketplace plan.

If your spouse is younger

Medicare covers individuals, not families. If you retire and your employer plan covered your spouse, they'll need their own coverage until they turn 65, such as COBRA or an ACA Marketplace plan. Plan this before your last day of work.

If you're the one who is 65 and covered through your working spouse's large-employer plan, you can usually delay Part B the same way, until your spouse retires or the coverage ends.

Does it ever make sense to take Part B while working?

Sometimes. If your employer plan has a high deductible or expensive premiums, Medicare as primary coverage with a Medigap or Advantage plan can cost less. With a small employer (fewer than 20 employees), it's usually required. We compare your employer plan's premium, deductible, out-of-pocket maximum and drug coverage against Medicare options with you, and show you the numbers. Remember that higher earners may pay an income-related surcharge (IRMAA) on Part B and Part D, based on income from two years earlier.

An example from Broward

A 66-year-old in Plantation works for a company with 150 employees and is covered by its health plan. He took premium-free Part A at 65 and stopped his HSA contributions. He plans to retire on March 31. In January he files forms CMS-40B and CMS-L564 so Part B starts April 1. Because Part B starts then, his six-month Medigap window runs from April through September, so he can choose a Supplement with no health questions, or compare it against a Medicare Advantage plan. He also picks a Part D plan that starts April 1, so there's no gap in drug coverage.

Working for a small business in South Florida

Many people in Broward and Palm Beach work for small businesses: medical offices, restaurants, family companies, churches and shops with fewer than 20 employees. If that's you, Medicare usually pays first at 65, and your employer plan pays second or may not pay at all for services Medicare would have covered. Sign up for Parts A and B during your Initial Enrollment Period, then compare adding a Medigap or Advantage plan against keeping the small-group plan as secondary coverage. Keeping both rarely makes financial sense.

Once you've sorted out timing, the next decision is which path to take. Read Medigap vs Medicare Advantage in South Florida.

Your checklist

1. Ask HR in writing: how many employees does the company have, and does the plan pay first or second after 65?
2. Decide on Part A, and stop HSA contributions 6 months before Medicare starts.
3. Ask each year whether your drug coverage is creditable, and keep the letter.
4. Two months before your coverage ends, file CMS-40B and CMS-L564 with Social Security.
5. Choose a Medicare Supplement and Part D plan, or a Medicare Advantage plan, to start the same day as Part B.
6. Arrange coverage for a younger spouse.

We help South Florida workers plan this at no cost, in English or Haitian Creole. Compare Medicare Supplement plans in Broward and Palm Beach or call us.