Turning 65 While Still Working: Do You Need Medicare Part B?
When delaying Part B at 65 is safe, how the 20-employee rule decides who pays first, the late penalty, the 8-month sign-up window and the HSA trap.
If you have group health coverage through your own or your spouse's current job, you can delay Medicare Part B without a late penalty and sign up later through a Special Enrollment Period. Whether delaying works well depends on the size of the employer. With 20 or more employees, the job-based plan generally pays first. With fewer than 20, Medicare generally pays first, so going without Part B can leave gaps in what gets paid.
Part B is the part of Medicare that covers doctor visits, outpatient care and tests, and in 2026 the standard premium is $202.90 a month. Part A, hospital coverage, is premium-free for most people. The decision at 65 comes down to three questions: who pays first, whether your coverage protects you from late penalties, and what Medicare does to a health savings account.
Key takeaways
- With current-employment coverage from an employer of 20 or more workers, the group plan generally pays first and Medicare second, so Part B can usually wait.
- With fewer than 20 workers, Medicare pays first and the group plan second, unless the employer is part of a multi-employer group in which at least one company has 20 or more employees.
- After the job or the coverage ends, whichever comes first, you have 8 months to sign up for Part B without a penalty. COBRA and retiree coverage do not extend that window.
- Missing it adds 10% to the Part B premium for each full 12 months you could have had Part B but did not, usually for as long as you have Part B.
- You cannot contribute to an HSA once Medicare starts, and premium-free Part A can be backdated up to 6 months when you sign up after turning 65.
Your sign-up window at 65
The Initial Enrollment Period is a 7-month window built around your 65th birthday: the 3 months before your birthday month, the birthday month itself and the 3 months after. If you sign up during it, premium-free Part A starts in your birthday month, or the month before if your birthday falls on the 1st. Part B starts in your birthday month if you sign up before that month. If you sign up in the birthday month or during the 3 months after it, Part B starts on the first day of the following month.
If you already get Social Security or Railroad Retirement Board benefits when you turn 65, you are enrolled in Part A and Part B automatically; otherwise you have to sign up yourself. According to the Medicare & You 2027 handbook, you can turn down Part B before the coverage start date shown on your Medicare card. If you do nothing, you keep Part B and the premium is taken from your benefit payment.
The 20-employee rule: who pays first
When you have two kinds of coverage, one is the primary payer and pays first; the other is secondary and pays some of what is left. Medicare's booklet on other insurance sets the order for people 65 and older whose group coverage comes from current employment, their own or a spouse's:
| Employer size | Who pays first | What it means for Part B |
|---|---|---|
| 20 or more employees, or fewer than 20 in a multi-employer group where at least one company has 20 or more | Generally the group plan, then Medicare | Part B can wait while the coverage lasts, with no penalty if you sign up within 8 months after it ends |
| Fewer than 20 employees, not in such a multi-employer group | Medicare, then the group plan | Delaying Part B still avoids the penalty, but the group plan pays second, so ask the plan how it pays claims if you have no Part B before you turn Part B down |
A plan in a multi-employer group can ask for an exception to this order, so check with the plan whether it pays first or second. An employer with 20 or more employees cannot give workers 65 and older a different health plan, or different terms, from younger workers, and if it covers spouses, a spouse 65 or older gets the same offer as a younger one.
Only coverage based on current employment protects a delay. The handbook lists what does not count: COBRA, retiree coverage, VA coverage, individual coverage such as a Marketplace plan, and former-employer coverage received through severance or a layoff. It also warns Marketplace enrollees that once they are considered eligible for premium-free Part A, they no longer qualify for Marketplace help paying premiums, and it says to sign up for Medicare when first eligible.
When delaying Part B is safe, and the 8-month window
If you put off Part B because you had group coverage through current employment, you can sign up at any point while that coverage continues. When it stops, a Special Enrollment Period of 8 months begins in the month after the job or the group coverage ends, whichever comes first. Signing up inside those 8 months means no late penalty.
Two points are often missed:
- COBRA does not count. COBRA lets you keep your former employer's plan for a time after you leave. Medicare.gov is explicit that COBRA is not group health plan coverage for this purpose, and taking COBRA leaves the 8-month deadline where it was. For people 65 and older, Medicare pays before COBRA, and the handbook warns that COBRA may then cover only a small part of your medical costs. The trade-offs are covered in COBRA versus a Marketplace plan.
- Retiree coverage does not count either. Medicare pays before retiree coverage, and according to Medicare a retiree plan may not pay for your care unless you are enrolled in both Part A and Part B.
How to sign up through the Special Enrollment Period
Social Security handles the sign-up, starting at SSA.gov/medicare/sign-up. Your proof of job-based coverage is Form CMS-L564, the Request for Employment Information: you complete Section A and the employer completes Section B. CMS's page for the form says to send it with the Part B application, Form CMS-40B, to your local Social Security office. If you sign up while you or your spouse are still working, or within the first full month after employer coverage ends, you can ask to delay your Part B start date by up to 3 months.
Medigap timing
Your six-month Medigap Open Enrollment Period, the best time to buy a Medicare Supplement policy, begins in the first month you are 65 or older and enrolled in Part B. Delaying Part B for job coverage therefore keeps that window closed until you sign up.
Drug coverage
You can also put off Part D, Medicare's drug coverage, if your job-based drug coverage is creditable, meaning similar in value to Part D. Your employer or union must tell you each year whether it is; keep those notices. If you later go 63 days or more in a row without Part D or other creditable drug coverage, a late penalty is added to your premium when you join: 1% of the national base beneficiary premium for each full month without coverage. That base premium is $38.99 in 2026 and $41.33 in 2027. Check with your benefits administrator before adding Medicare drug coverage, because doing so may cost you your employer coverage.
The late enrollment penalty if you get it wrong
If you could have had Part B and went without it, with no Special Enrollment Period, your premium goes up 10% for each full 12-month period you went without it. You usually pay the penalty for as long as you have Part B, which Medicare.gov says for most people means for life.
Medicare.gov's example is a 24-month wait with no Special Enrollment Period, which means a 20% penalty. In 2026 that is $202.90 plus $40.58, or $243.48, which Medicare rounds to $243.50 a month. Partial years are dropped: 27 months without Part B counts as 2 full 12-month periods, so the penalty is still 20%. Without a Special Enrollment Period, the route back is the General Enrollment Period, January 1 to March 31 each year, with coverage starting the month after you sign up.
The HSA trap when Medicare starts
A health savings account, or HSA, is a tax-advantaged account paired with a high-deductible health plan (HDHP). Under IRS Publication 969, your HSA contribution limit drops to zero from the first month you are enrolled in Medicare, and the rule covers retroactive Medicare coverage as well. Money put in for months that Medicare later covers is an excess contribution. It faces a 6% excise tax for every year it stays in the account, unless you take it out, along with any earnings on it, by the due date of your tax return, including extensions.
The catch is timing. When you sign up after turning 65, premium-free Part A is usually backdated: it starts up to 6 months before the month you sign up for Part A or apply for Social Security benefits, though never before the first month you were eligible. The handbook's chart therefore gives two cut-off points. If you sign up during your Initial Enrollment Period, or less than 6 months after turning 65, make your last HSA contribution in the month before you turn 65, or two months before if your birthday is on the 1st. If you sign up 6 or more months after turning 65, stop contributions, your own and your employer's, 6 months before the month you apply for Medicare.
Example: The person and dates are illustrative; the HSA limits are the IRS figures for 2027. Someone turns 65 in September 2027, keeps self-only HDHP coverage through a large employer and does not sign up for Medicare. They retire and apply for Social Security and Medicare in June 2028. Premium-free Part A reaches back 6 months, so it starts December 1, 2027. In 2027 they were HSA-eligible January through November, 11 months. The 2027 limit is $4,500 for self-only coverage plus a $1,000 catch-up for people 55 or older, $5,500 in all, and it is prorated by month: $5,500 × 11 ÷ 12 = $5,041.67. If payroll put in the full $5,500, the extra $458.33 is an excess contribution to withdraw before the tax deadline. For 2028 the limit is zero, because Medicare covers every month.
The balance stays yours. After 65 it can pay qualified medical expenses tax-free, including Medicare premiums but not Medigap premiums, and other withdrawals are taxed as income without the extra 20% tax. The rules and limits are in HSA rules for 2026 and 2027.
A decision guide
- Employer with 20 or more workers, still contributing to an HSA, not yet collecting Social Security: delaying both Part A and Part B does not trigger a penalty while the job coverage lasts, as long as you sign up within 8 months after it ends. Plan the HSA stop date around the 6-month lookback.
- Employer with 20 or more workers, no HSA: premium-free Part A costs nothing for most people, so taking it at 65 while delaying Part B adds no premium.
- Employer with fewer than 20 workers: Medicare pays first, so find out from the plan how it handles claims without Part B before deciding.
- COBRA, retiree or Marketplace coverage only: none of these protects a delay, and Medicare's guidance is to sign up when first eligible.
Once you are on Medicare, each fall's open enrollment is when you can change plans; see what to review in Medicare open enrollment.
Frequently asked questions
Should you sign up for Part A at 65 if you keep working?
If Part A is premium-free for you, you can sign up at 65 or at any later time. If you or your employer still put money into an HSA, signing up ends that: the contribution limit is zero from the month Part A starts, and Part A can be backdated up to 6 months.
Do you need Part D if your employer plan covers drugs?
Not while that drug coverage is creditable. Keep the yearly notice that says so, and avoid a gap of 63 days or more in a row without creditable drug coverage once it ends.
What do you send to sign up for Part B after leaving a job?
Form CMS-L564, with Section B completed by your employer, as proof of job-based coverage, together with your Part B application (Form CMS-40B). Social Security handles the sign-up, at SSA.gov/medicare/sign-up or your local office.
Sources
- When does Medicare coverage start? (Medicare.gov)
- Avoid late enrollment penalties (Medicare.gov)
- How Medicare Works with Other Insurance (Medicare.gov)
- Medicare & You 2027 (Centers for Medicare & Medicaid Services)
- CMS-L564: Request for Employment Information (CMS)
- Annual Release of Part D National Average Monthly Bid Amount and Other Part C & D Bid Information, July 28, 2026 (CMS)
- Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (IRS)
- Revenue Procedure 2026-24 (IRS)