· Alex Cox-Cuzzi · Working & Medicare · 4 min read
Turning 65 and Still Working? How to Handle Medicare Without a Costly Mistake
You're turning 65 but not retiring. Here's how to tell whether you can delay Medicare Part B, and how to avoid a late-enrollment penalty.
Your 65th birthday is coming up, but retirement is not. You like your employer health plan and may be wondering: “Do I really have to sign up for Medicare?”
The answer depends on what kind of coverage you have, who provides it, and how that coverage coordinates with Medicare. There is no single rule that says every working person must take Part B on their 65th birthday. There is also no rule saying that simply having any other insurance protects you from a penalty.
Start by finding out who pays first
If you have group health coverage through your or your spouse’s current employment, you may be able to postpone Part B and enroll later through a Special Enrollment Period without a late penalty. But confirm how the employer plan pays claims. If the employer has fewer than 20 employees, Medicare generally pays first for people 65 or older, and the employer plan may not cover what you expect if you skip Medicare. Multi-employer plans and other circumstances can change that answer.
Ask your benefits administrator these questions in writing:
- Is this a group health plan based on my or my spouse’s current employment?
- Does the employer plan pay first or expect Medicare to pay first after I turn 65?
- Must I enroll in Part A or Part B for the employer plan to pay normally?
- Is the prescription coverage creditable for Medicare Part D? Can I have the annual notice?
- If I enroll in Medicare, what happens to my coverage and any coverage for my spouse or dependents?
COBRA, retiree insurance, and Marketplace insurance are not interchangeable with qualifying coverage from current employment. In particular, COBRA does not extend your Part B Special Enrollment Period.
Understand what you are declining
Part A is hospital insurance; many people qualify for it without a premium. Part B covers outpatient and other medical services and generally has a monthly premium. Part D covers prescription drugs through private plans. Each part has its own enrollment rules.
If you decide to postpone Part B, make sure the decision is recorded correctly. If you are not automatically enrolled, you can generally wait to apply for Part B while your qualifying employer coverage continues. If you are automatically enrolled, follow the instructions that come with your Medicare card to decline Part B before it begins, or contact Social Security for help. If you already have Part B, ask Social Security how to formally terminate it and confirm the effective date and consequences first. Do not rely on leaving a card unused or ignoring a premium bill.
If you receive Social Security benefits, enrollment may occur automatically. Check your actual status rather than assuming you were or were not enrolled.
Watch the HSA issue
If you or your employer contribute to a Health Savings Account, enrolling in Medicare can affect your eligibility to contribute. Medicare advises people with HSAs to stop contributions six months before retiring or applying for Social Security benefits, because Medicare Part A may start retroactively. Coordinate the timing with your benefits administrator or tax adviser before making contributions or filing for Medicare.
Put the end of employer coverage on your calendar
When the employment or the group coverage on which you relied ends, whichever happens first, your Part B Special Enrollment Period generally lasts eight months. Begin the application before employer coverage ends to avoid a gap; Medicare suggests starting about a month early. Social Security may request proof of your employment and group coverage. If you already have Part A, the Part B application is Form CMS-40B; the employer information form is CMS-L564. Ask Social Security for the current submission steps.
Drug coverage has a separate clock. If you lose creditable prescription coverage, do not go 63 consecutive days or more without Part D or another creditable drug plan. Keep your employer’s creditable-coverage notices because a future Medicare drug plan may ask for proof.
Why the details matter
Without a valid reason to delay, a Part B late enrollment penalty is generally 10% of your monthly Part B premium for each full 12-month period you could have enrolled but did not. A Part D penalty can also apply after a long enough gap in creditable drug coverage. Delayed enrollment may leave you waiting for coverage to start.
The sensible first step is a conversation with your employer’s benefits team. Then confirm your Medicare enrollment options and deadlines with Social Security. Mickley Insurance Group can help you compare the coverage choices available when you are ready to move from employer insurance to Medicare.
