Actively Working Past Age 65

People actively working at age 65 or older have a few things to consider when deciding if Medicare is right for them. Our agents can help you figure this out and find what is best for your needs.

If the company has more than 20+ employees, the group health coverage is credible, and it would be considered primary insurance.

If the company has fewer than 20 employees, the group health coverage would not be credible, and Medicare would need to be your primary.

Use the L564 Medicare form when you retire. This form is necessary as proof that you had credible coverage while working over age 65.

Health Savings Accounts (HSA) and Medicare don’t mix. You may incur a tax penalty if you were contributing to an HSA while on any part of Medicare.

People actively working at age 65 or older have a few things to consider when deciding if Medicare is right for them. The alternative many people must consider is whether they have qualifying group health coverage that is cost efficient for their needs.

Employer insurance, if it’s qualifying, may be the right choice depending on important factors such as premium costs and copayments/cost-share. Our agents can help you figure this out and if your work coverage is better for you, that’s what we will recommend.

Age 65 and Larger Companies (20+ Employees)

We recommend anyone considering staying on group coverage to activate their Part A of Medicare. Part A for most individuals has no cost if you have paid Medicare taxes for at least 10 years. Part A is hospital insurance, and both Part A and group coverage can coordinate to lower your inpatient hospital costs.

Part D is often delayed as well as long as your employer coverage offers Rx coverage.

No concrete steps must be taken to delay your Part D; you simply don’t sign up for a plan. Which plan offers cheaper prescriptions is based on the prescription themselves. Most Part D plans do have a premium as well. Your insurance plan must cover as much as the standard Part D plan, or else it’s not considered credible and a late enrollment penalty may apply. Some high-deductible group health coverage do not qualify as credible coverage for Part D prescription drugs.

Part B of Medicare costs money, which is what most people decide to defer if they remain on group coverage. The base premium for Part B in 2026 is $202.90/mo. When deciding which coverage is best for you, research your policy to determine which has lower premiums, lower cost-share for services, lower prescription drug costs, and if you’re married, how much spousal coverage will cost on top of Medicare.

The exception to deciding if Medicare is right for you is if you are contributing to an HSA.

Retirement

When it comes time to retire after you have turned 65, you must do a few things. First, your company may send you a credible coverage letter. This provides proof that you were on employer group health insurance. Keep this letter just in case!

Second, Medicare uses a form L564, or “Medicare Request for Employment Information”. This document also proves you have employer coverage. Most likely, your HR department has these on file. They will need to complete their portion and you will mail or fax a completed document to Medicare, either at time of enrollment or once they request more information from you. Sending such form will eliminate any penalties that Medicare is brewing, as long as your coverage was credible.

Starting on the last day of your employer group health coverage, you have 8 months months to sign up for Medicare Parts A and B to avoid penalties. You also have 63 days to begin your Part D coverage. Supplemental coverage, such as Medicare Advantage and Medigap, have different enrollment periods as well once you start your Part B. However, this does not eliminate you from any previous gaps in coverage. Once you enroll, Medicare can only start as early as the 1^st day of the following month. With proper planning, we recommend you start this process early enough to begin your Medicare the day after or before your employer coverage ends.

Under 65 on Medicare with Employer Coverage

If your employer has 100+ employees, your group coverage will remain primary and Medicare will become secondary. Signing up for Part A is usually a good idea and typically automatic if you’re collecting disability. Part A is free for most people that have worked for at least 10 years it would coordinate with your employer coverage to provide lower inpatient hospital costs. Since enrollment is automatic for those that have been collecting disability for 24 months, you must stop Part A if you wish to defer enrollment. There are many ways to defer enrollment, but most often this is achieved by mailing back your Medicare card and following the instructions on your welcome to Medicare packet that you should be receiving prior to enrollment.

Since Part B and D have premium costs, many people defer these parts if their employer insurance has credible coverage for medical expenses and prescription drugs.

The opposite is true if your employer has fewer than 100 employees. Medicare would then become your primary. As your primary, it’s important to get both Part A and B for your hospital and medical insurance. If your employer offers credible prescription drug coverage, Part D may be deferred.

If you are contributing to an HSA through your employer coverage, do not enroll in Medicare immediately. Learn the rules behind HSA and Medicare further below.

HSA and Medicare

The one exception to joining Medicare as you work past age 65 is whether your employer coverage is compatible with an HSA, or Health Savings Account. You may no longer contribute to an HSA if you enroll into any parts of Medicare, no matter whether your employer is large or small. Contributions from an employer are also not allowed.

Individuals working for an employer with fewer than 20 employees must enroll into Parts A and B of Medicare. Any HSA accrued up until then may be used for health services or to help pay for your Medicare premiums. A spouse that is also a part of your group health coverage may continue to contribute to the HSA if those contributions are not in your name.

Individuals working for a larger employer with more than 20 employees may decide to defer all parts of Medicare if they wish to continue to contribute to their HSA. Typically, if the employer coverage is not HSA compatible, we recommend joining Medicare Part A because of the potentially lower costs for inpatient hospital services. Those with an HSA have the same choice, but contributions to their HSA must cease if any part of Medicare is taken.

How it works

Let’s say you enroll into Medicare after you’ve turned 65. Enrolling into Part A will be retroactive 6 months or to your 65th birth month, whichever is fewer months. This means HSA contributions must stop 6 months prior to enrollment, to avoid overlap. If your 65th birthday was fewer than 6 months ago, your earliest Medicare start date would have been the 1st of your birth month. Therefore, you may make contributions to an HSA until the 1st of your birth month.

For example, if you're age 68 and you enroll into Medicare in June, your earliest start date would normally be July 1^st. Medicare will retroactive your start date 6-months, so your HSA contributions must stop by January 1^st.

Using a similar example, now let’s say your age 66 and your birthday was in March. If you enroll into Medicare for a July 1^steffective date, Medicare will retroactive your effective date to the 1st of your birth month, which was when you became Medicare eligible. You will want to end HSA contributions by March 1^st.

Potential Consequences

Any contributions to an HSA after you’ve started any part of Medicare may have negative tax implications. Consult your tax expert on what these contributions mean for you. An excise tax may be applied to all contributions made while enrolled in Medicare.

If you are contributing to an HSA and you also have started drawing your Social Security benefits, you may automatically be retroactively enrolled into Part A of Medicare. Do not attempt to cancel your Part A, as this will trigger your forfeiture of any benefits you have received already.

COBRA Coverage

If you have COBRA coverage prior to turning 65, you must enroll in Medicare when you become eligible. COBRA remains secondary insurance and Medicare will be primary. You may cancel COBRA when your Medicare takes effect, but any dependents may continue their COBRA coverage for up to 3 years after Medicare enrollment.

Those that are past age 65, on employer coverage, and then retire may accept COBRA temporarily. Technically you have 8 months to activate your Part B of Medicare to avoid lifelong late enrollment penalties. Missing this enrollment window will also force you to wait until the next enrollment period to be able to sign up for Part B. We strongly recommend activating Part B sooner (ideally when you retire), as COBRA may not pay its fair share since it’s secondary to Medicare.

If you opt to continue COBRA coverage, you may delay Part D as long as the COBRA coverage has credible prescription coverage.

Frequently Asked Questions

Can my employer kick me from my coverage once I turn 65?

This would be illegal. The employer has no choice in the matter. You may decide to continue your employer coverage or you may decide to switch to Medicare. Ultimately, the choice is yours and yours alone. That would be a great time to compare premium pricing, coinsurance, etc.

Now if you are on retiree coverage, that changes the answer. Employers do not have to provide insurance to former employees after age 65. Benefits usually change once you enter retirement coverage. Because of this, Medicare becomes primary and retiree coverage will be secondary. If the retiree coverage is Medicare Advantage or Medigap, then you would need to enroll in Parts A and B during your Initial Enrollment Period.

Can I enroll into Part B while still working for a large employer?

Yes, this would not affect your coverage negatively. Medicare would just act as supplemental coverage to your employer health insurance, as Medicare would be secondary.

However, you would be paying double premiums. One for Part B and one from your current insurance. Also, activating your Part B brings a 6-month special enrollment period for Medigap that you may squander. You have guaranteed issue rights to get a policy with no health underwriting. You may not have a Medigap policy and large employer coverage at the same time because Medigap can only pay if Medicare is primary.

Can my spouse continue contributing to our HSA if she’s not on Medicare?

If your spouse is covered under your employer’s insurance, yes. The contributions must be in your spouse’s name. You both may use the funds from the HSA for qualifying health expenses or Medicare premiums.

How do I decide if my employer coverage is better than Medicare?

Ask your HR for coverage details and your summary of benefits. Compare premiums, coinsurance, deductibles, maximum out of pockets, prescription drug costs, whether you get dental/vision/hearing, what supplemental coverage would cost, and how much a separate insurance for a spouse would be.

All of these would be major factors when deciding which insurance to choose. Employer group health could be better for you, but often Medicare is cheaper. We can help you decide no matter which direction you go.