Working Past 65: How Medicare Fits With Job Coverage
If you or your spouse keep working past 65, whether you need Part B now depends on your employer size. Here is how the rules work, how to avoid penalties, and what to do with an HSA.
If you keep working past 65 and have group health coverage through your own or your spouse's current job, you may be able to delay Part B without a penalty. The key is employer size. With 20 or more employees, the group plan usually pays first and Medicare second, so many people take premium-free Part A and wait on Part B. With fewer than 20 employees, Medicare usually pays first, and you generally need Part B as soon as you are eligible. When the job or the coverage ends, you have an 8-month Special Enrollment Period to sign up for Part B.
Who pays first
Always confirm with the employer's benefits administrator in writing. Some small employers belong to a multi-employer plan with different rules.
| Your situation | Who usually pays first | Do you need Part B now? |
|---|---|---|
| Employer has 20 or more employees | The group plan | Usually optional; many people delay it |
| Employer has fewer than 20 employees | Medicare | Usually yes, or the group plan may pay little |
| Retiree coverage, COBRA or individual coverage | Medicare | Yes: these do not count as coverage from current work |
| Disability and employer with 100 or more employees | The group plan | Usually optional |
Should you take Part A while still working?
Part A is premium-free for most people, so many take it at 65 even while working. It can pay secondary to your group plan on a hospital stay. The exception is a Health Savings Account: once any part of Medicare starts, you can no longer contribute. If you want to keep funding an HSA, delay both Part A and Part B, and do not start Social Security retirement benefits, which enroll you in Part A automatically.
When you later enroll in Part A after 65, it can be backdated up to six months (never earlier than the month you turned 65). Stop HSA contributions six months before you apply to avoid a tax penalty on contributions made after coverage began.
Drug coverage while you work
Your employer must tell you each year whether its drug coverage is "creditable", meaning at least as good as standard Part D. If it is, you can delay Part D without a penalty. Keep those notices: you may need to show them when you join a Part D plan later.
If the coverage is not creditable, consider joining Part D during your Initial Enrollment Period, because the penalty is 1 percent of the national base premium ($38.99 in 2026) for every full month you go without.
When you retire: the steps in order
- About two to three months before your coverage ends, ask your employer to complete form CMS-L564 (Request for Employment Information).
- Complete form CMS-40B (Application for Enrollment in Part B) and submit both to Social Security, online, by mail or in person. Ask for Part B to start the day after your group coverage ends.
- Use the 8-month Special Enrollment Period, which starts the month after your employment or coverage ends, whichever comes first. Do not count on COBRA to stretch it: COBRA does not extend the 8 months.
- Join a Medicare Advantage or Part D plan within 2 months after the group coverage ends.
- If you want a Medicare Supplement, apply as soon as Part B starts. Your six-month Medigap Open Enrollment Period begins the first month you have Part B and are 65 or older, so delaying Part B also delays, and protects, that window.
Common mistakes I see
- Assuming COBRA or retiree coverage lets you delay Part B. It does not, and the Part B penalty can follow you for life.
- Taking Social Security at 66 or 67 while still contributing to an HSA, which starts Part A and makes later contributions excess.
- Waiting until the last month of the 8-month window and leaving a gap with no coverage.
- Forgetting a spouse: if your spouse is covered on your plan and is under 65, they need their own plan when you retire. Our health insurance before Medicare guide covers the Colorado marketplace options.
A worked example with dates: retiring at 66
Here is a hypothetical, not a real client. Sam lives in Thornton, turns 65 in April 2027, and works for a company with about 200 employees. Sam has family coverage there, contributes to an HSA, and plans to retire on September 30, 2028. Applying the federal rules from CMS:
| When | What Sam does | Why |
|---|---|---|
| April 2027 (turns 65) | Keeps the group plan, delays Parts A and B, keeps funding the HSA | Group coverage from current work pays first, so no Part B penalty builds |
| August 2028 | Files CMS-40B with CMS-L564 signed by the employer, asking for Parts A and B to start October 1, 2028 | Part A is backdated six months from the application, to February 2028 |
| Last HSA contribution | For January 2028 at the latest | No contributions once any part of Medicare is in force; ask a tax adviser how the yearly limit prorates |
| By September 30, 2028 | Chooses Medicare Advantage, or a supplement plus a Part D plan, for an October 1 start | No gap after the group plan ends |
| October 1, 2028 to March 31, 2029 | Six-month Medigap Open Enrollment Period | It starts with Part B, so delaying Part B kept it intact |
| November 30, 2028 | Last day of the 2-month window to join a Medicare Advantage or Part D plan | Creditable drug coverage ended September 30 |
| May 31, 2029 | Last day of the 8-month Part B Special Enrollment Period | Eight months starting the month after coverage ends |
What a mistake costs: the Part B penalty in dollars
The Part B late enrollment penalty is 10 percent of the standard premium for each full 12 months you could have had Part B and did not, and you pay it for as long as you have Part B (CMS). It applies when the coverage you relied on was not coverage from current work, for example retiree coverage, COBRA, or a group plan at an employer with fewer than 20 employees where Medicare should have paid first.
Using 2026 figures: someone who goes 26 months without Part B has two full 12-month periods, so a 20 percent penalty. That is $40.60 a month on top of $202.90, a $243.50 premium, or $487.20 extra a year, and the penalty grows whenever the standard premium grows. A Part D gap works the same way at 1 percent of the national base premium per month: 20 months without creditable drug coverage adds $7.80 a month in 2026 (20 percent of $38.99, rounded to the nearest 10 cents).
Kidney failure and disability: different rules
If you are under 65 and have Medicare because of a disability, the employer group plan pays first only when the employer has 100 or more employees. If you have Medicare because of End-Stage Renal Disease, CMS describes a 30-month coordination period in which your employer or union group plan pays first, whatever the employer size; after 30 months Medicare pays first. Confirm the dates with the plan before you drop anything.
Questions I ask, and you should ask HR
- How many employees does the company have, counted the way Medicare counts them, and is the plan part of a multi-employer group?
- Does the plan pay first or second once I am 65 and eligible for Medicare? Can I have that in writing?
- Is the drug coverage creditable? Please send the yearly notice.
- On what exact date does my coverage end when I retire: the last day of work, or the end of that month?
- Will my spouse lose coverage on the same date, and is my spouse under 65?
- Who in HR signs form CMS-L564, and how long does it usually take?
Income and IRMAA in your last working years
Medicare premiums are based on your tax return from two years earlier, so your highest-earning years can raise your Part B and Part D premiums right after you retire. In 2026, IRMAA starts above $109,000 of modified adjusted gross income for a single filer or $218,000 joint (CMS, 2026). If your income has dropped because you stopped working, file form SSA-44 with Social Security to ask for a new decision based on your current income.
The bottom line
Find out your employer's size and whether its drug coverage is creditable, decide about Part A with your HSA in mind, and when the job ends, file CMS-40B and CMS-L564 so Part B starts the day after group coverage stops. Treat the end of work as your real Medicare start date, including your one-time Medigap window. We help Brighton-area clients map this out a few months ahead, so nothing lapses.
Want to go through this with someone?
Lisa Asmussen at our Brighton office will go through your doctors, your prescriptions and your real numbers, and explain plainly what we found. Take the Stress Out of Medicare
Prefer to learn in a group? See our Medicare education sessions, in person in Brighton or online, and official Medicare forms and publications on our Resources page.
Sources
- 2026 Medicare Parts A and B premiums and deductibles, Centers for Medicare & Medicaid Services
- 2026 Medicare Part D bid information and base beneficiary premium, Centers for Medicare & Medicaid Services
- When can I sign up for Medicare?, Centers for Medicare & Medicaid Services
- Avoid late enrollment penalties, Centers for Medicare & Medicaid Services
- CMS: End-Stage Renal Disease (ESRD), Centers for Medicare & Medicaid Services
- State Medigap rules: birthday rule and coverage under 65 (as of May 11, 2026), National Association of Insurance Commissioners
Please note: We do not offer every plan available in your area. Currently we represent 10 organizations which offer 106 products in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. Headwaters Health and Wealth is not connected with or endorsed by the United States government or the federal Medicare program. Medicare has neither endorsed nor reviewed this information.