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Still Working at 65? What to Do About Medicare

Austin TylerLocal Kentucky Medicare agent · June 3, 2026 · 6 min read

More people than ever are working past 65, and it raises a fair question: do I have to sign up for Medicare if I already have good insurance through my job? The honest answer is "it depends" — and the thing it depends on most is how big your employer is. Get this right and you can save real money. Get it wrong and you can trigger a penalty that never goes away.

The question that decides everything: how big is the employer?

This is the fork in the road. The rules hinge on whether your (or your spouse's) employer has 20 or more employees.

If the employer has 20+ employees

Your group health plan stays your primary coverage, and you can usually delay Part B without any penalty while you're actively working and covered. Many people in this situation take premium-free Part A and simply wait on Part B until they retire. (See the HSA warning below before you even take Part A.)

When the job or that coverage ends, you get a Special Enrollment Period (SEP): 8 months to sign up for Part B without a late penalty. To use it smoothly, your employer fills out a short form (CMS-L564) proving you had coverage.

Don't lean on COBRA or retiree coverage to delay Part B. The penalty-free delay only works while you have coverage from active employment. COBRA, retiree plans, and Marketplace (ACA) plans do not count — and the 8-month clock starts when the job ends, not when COBRA runs out. People get burned here every year.

If the employer has fewer than 20 employees

Now it usually flips: Medicare typically becomes your primary payer at 65, and your group plan pays second. That means you generally need to enroll in both Part A and Part B during your Initial Enrollment Period, even though you're still working — otherwise you can be left with big gaps and a penalty later. Always confirm with your benefits administrator how your specific small-group plan coordinates with Medicare.

The HSA trap nobody warns you about

If you contribute to a Health Savings Account (HSA), pay close attention. Under IRS rules, you can't contribute to an HSA in any month you're enrolled in any part of Medicare — including premium-free Part A.

Here's the sneaky part: when you eventually enroll, Part A coverage can be backdated up to 6 months. So the standard guidance is to stop HSA contributions at least 6 months before you enroll in Medicare or claim Social Security, to avoid a tax penalty. If keeping your HSA going matters to you, this needs to be part of the plan from the start.

Don't forget drug coverage (Part D)

If your employer plan's drug coverage is "creditable" (at least as good as Medicare's), you can stay on it and skip Part D for now with no penalty. If it's not creditable and you go 63+ days without coverage, you'll owe a Part D late penalty later — it's 1% of the national base premium ($38.99 in 2026) for every month you went without, added on for life. Your plan is required to send you a notice each year telling you whether its drug coverage is creditable. Keep that letter.

The lifelong penalty, in plain terms: Miss Part B when you should have taken it and the premium climbs 10% for each full year you went without — permanently. In 2026 the standard Part B premium is $202.90/month, so even a one-year penalty adds up fast. This is exactly why the "20 or fewer employees" question is worth a phone call.

Your simple action plan

Find out if your (or your spouse's) employer has 20+ employees.
Ask your benefits administrator whether your plan pays primary or secondary at 65, and whether the drug coverage is creditable.
If you have an HSA, plan to stop contributions ~6 months before enrolling.
When you retire, use your 8-month Special Enrollment Period — don't wait for COBRA to end.

None of this is hard once someone lays it out for your exact situation. That's literally what I'm here for.

When you're ready to actually pick coverage, my local Medicare guide for Lexington covers your 2026 options and which plans keep your Bluegrass doctors and hospitals in-network.

Quick recap

The key question is your (or your spouse's) employer size: 20+ employees vs. fewer than 20.

20+ employees with active coverage: you can usually delay Part B penalty-free and enroll later.

Fewer than 20: Medicare usually pays first, so you typically need Parts A & B at 65.

COBRA and retiree plans don't count as active coverage — the 8-month window starts when the job ends.

Stop HSA contributions about 6 months before enrolling in Medicare to avoid a tax penalty.

Test what you learned

Five quick questions — pick an answer to see if you're right, and why.

Working past 65 and not sure what to do?

Tell me your situation and I'll tell you straight whether to enroll now or wait — and how to dodge the penalties. Local, free, no pressure.

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Or call me directly: (859) 618-6443

This article is general information, not advice for your specific situation, and Medicare rules and figures can change. 2026 amounts are from CMS. Tyler Insurance Group is not connected with or endorsed by the U.S. government or the federal Medicare program. For complete details on all your options, contact Medicare.gov or 1-800-MEDICARE.