Medicare
Do I Have to Take Medicare at 65? The Employer-Plan Rules
Still working at 65? Whether you need Medicare depends on employer size and coverage type. COBRA and retiree plans do not count. See the penalty traps and what to do.
Checked against primary sources from Social Security, Medicare and the IRS. How we check our numbers
Turning 65 while you're still working raises a question your employer's HR office may not answer clearly: do you have to sign up for Medicare? The answer depends on two things — how many people your employer has, and whether your coverage comes from a job you still hold. Get either one wrong and you can pay a Part B penalty for the rest of your life.
Do I Need Medicare If I Have Employer Insurance? The 20-Employee Test
If your health coverage comes from your own or your spouse's current job at an employer with 20 or more employees, the employer plan pays first and you can delay Part B without a penalty. With fewer than 20 employees, Medicare pays first, and your employer plan may refuse to pay claims Medicare would have covered. (CMS: How Medicare Works with Other Insurance)
| Your coverage at 65 | Who pays first | Do you need Part B now? |
|---|---|---|
| Current job, 20+ employees | Employer plan | No — you can delay |
| Current job, under 20 employees | Medicare | Yes, in most cases |
| COBRA | Medicare | Yes |
| Retiree plan | Medicare | Yes |
| Marketplace or individual plan | — | Yes |
The small-employer rule is the one that catches people. Ask your benefits office, in writing, whether the plan requires Medicare at 65.
Should you take Part A anyway?
Most people should sign up for premium-free Part A at 65 even while working, because it's free and acts as secondary hospital coverage. The big exception is anyone contributing to a health savings account: any part of Medicare ends HSA eligibility. If that's you, see the HSA and Medicare stop-date calculator first, because Part A can be backdated up to six months when you apply later.
What if you're already collecting Social Security?
If you started Social Security before 65, Medicare enrolls you in Parts A and B automatically and mails your card about three months before your birthday. If you're still covered by a large employer, you can decline Part B by following the instructions that come with the card, and then sign up later without penalty.
Part A is different: you can't keep Social Security and turn Part A down. That matters only for HSA savers — another reason to check your HSA before you file for Social Security.
COBRA and Medicare: Why COBRA Does Not Protect You
COBRA keeps your old employer's plan going, but it isn't coverage from current work. Your 8-month window to sign up for Part B without a penalty starts when the job or the employer coverage ends, whichever comes first — not when COBRA runs out. (Medicare.gov: COBRA coverage)
Here's how the mistake usually happens. Someone retires at 66, takes 18 months of COBRA, and signs up for Medicare when COBRA ends. They've missed the 8-month window, have to wait for the January–March General Enrollment Period, and pay a penalty of 10% of the standard premium for each full year late — $202.90 a month in 2026 is the base (Medicare.gov: penalties). Price yours on the Part B late penalty calculator.
If you're already on Medicare when you choose COBRA, the order flips: Medicare pays first, and COBRA may only fill gaps.
The 8-month window, month by month
Suppose your job and its health plan end on June 30, 2026. Your Special Enrollment Period runs July 2026 through February 2027 — eight full months (Medicare.gov: working past 65).
| If you sign up in | Part B starts |
|---|---|
| June 2026 (while still covered) | July 1, 2026 — no gap |
| July 2026 – February 2027 | The month after you sign up |
| March 2027 or later | Only in the next General Enrollment Period, with a penalty |
Signing up in your last month of work is the cleanest move: coverage starts the day the employer plan ends. The Part B deductible, $283 in 2026, applies from your first month on Part B.
Should you keep the employer plan or switch to Medicare?
Even when you're allowed to delay, it's worth comparing. Some employer plans have high deductibles or premiums that make Medicare cheaper, especially for a spouse whose coverage costs extra. Line up the two for a year:
- Medicare: the Part B premium of $202.90 a month, the $283 Part B deductible, the Part A hospital deductible of $1,736 per benefit period, plus a Medigap or Medicare Advantage plan and Part D.
- Employer plan: your share of the premium, the deductible and the out-of-pocket maximum.
If you're a higher earner, add IRMAA to the Medicare side — it can make the employer plan the bargain. And remember the Medigap clock: your six-month guaranteed window starts when Part B does, so starting Part B "just in case" can waste it.
What being late would cost
The Part B penalty is permanent. Two full years without Part B after your window adds 20%, and five years adds 50%, to every Part B premium you'll ever pay. On 2026's standard premium, two years late is about $40 a month extra, roughly $480 a year, for life — and it grows as the premium does.
The Part D penalty adds 1% of the national base premium ($38.99 in 2026) for each month without creditable drug coverage.
How to sign up later without a penalty
When the job-based coverage is ending, you'll file two forms with Social Security: CMS-40B, the Part B application, and CMS-L564, on which your employer confirms your group coverage dates. Do it during the last months of work or within 8 months after, and Part B starts without a penalty.
Don't forget drug coverage. Your employer must tell you each year whether its drug plan is "creditable." If it is, you can delay Part D too; when it ends, you have 63 days to join a Part D plan before a separate penalty starts — see the Part D penalty calculator.
A quick decision guide
Most people fit one of four situations. Find yours, and you'll know whether to sign up at 65 or wait.
- Large employer, still working, happy with the plan: take premium-free Part A (unless you fund an HSA), delay Part B, keep the paperwork.
- Small employer: sign up for Parts A and B at 65.
- Retiring soon: sign up so Medicare starts the day after your employer coverage ends.
- On COBRA or a retiree plan: sign up now; don't wait for COBRA to run out.
Our take
The rules are simple once you know which box you're in; the danger is assuming. Get your employer's answer in writing before 65, and set a reminder for the month your job ends. Then use the Medicare sign-up window calculator to see exactly when coverage would start.