Still Working at 65? Your Complete Guide to Delaying Medicare

Name: Legacy Wealth Services
Address: Happy Valley, OR, 97086, US
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By Rodney Cummings, RSSA® | Legacy Wealth Services

Turning 65 doesn’t automatically mean you must enroll in Medicare — but the rules for when you can delay without penalty are specific, and getting them wrong is expensive.

If you or your spouse are still working at 65, this guide covers everything you need to know: when you can safely delay, what to watch out for, and exactly what to do when you eventually do retire.

The Most Important Question: How Big Is Your Employer?

Before anything else, this is the question that determines your entire Medicare strategy.

Employer with 20 or More Employees

If you work for a company with 20 or more employees and you’re covered under their group health plan:

Your employer plan is PRIMARY — it pays first
Medicare would be secondary — it pays what’s left over
You can safely delay Part B (and Part D) without penalty
Your 8-month Special Enrollment Period (SEP) clock starts when you retire or lose employer coverage — whichever comes first

✅ Action: You may delay Medicare Part B. Most people in this situation still sign up for Part A (hospital coverage) at 65 since it’s free for most people — unless you have an HSA (see below).

Employer with Fewer Than 20 Employees

If your employer has fewer than 20 employees, the rules flip entirely:

Medicare becomes PRIMARY — it pays first
Your employer plan pays second
If you haven’t enrolled in Medicare, your small employer plan may pay as if Medicare had already paid its share — meaning you could be left with a large bill
Delaying Part B in this situation can result in significant uncovered expenses and a permanent late enrollment penalty

⚠️ Action: If your employer has fewer than 20 employees, you should enroll in both Part A and Part B at 65, even if you’re still working.

How Do You Find Out Your Employer’s Size?

Ask your HR department: “How many employees are enrolled in the company health plan?” — or more precisely, “Is our group health plan subject to Medicare Secondary Payer rules?”

The law uses the number of employees, not enrollees — but HR will know. Get it in writing if possible.

What About Your Spouse?

Covered under your spouse’s employer plan? The same rules apply based on your spouse’s employer size:

Spouse works for a company with 20+ employees → you can delay Medicare Part B without penalty
Spouse works for a company with fewer than 20 employees → you should enroll in Medicare at 65
Spouse is retired and you’re covered under their retiree health plan → this does NOT count as active employment coverage. You cannot delay Medicare based on retiree coverage.

Key distinction: The coverage must come from current active employment — yours or your spouse’s. Retiree health coverage does not qualify.

Part A vs. Part B: They’re Not the Same Decision

Most people lump “Medicare” together, but Part A and Part B are separate decisions.

Medicare Part A (Hospital Coverage)

Free for most people (if you or your spouse worked 40+ quarters / 10 years paying Medicare taxes)
Generally safe to enroll at 65 even if you’re still working
Exception: If you have an HSA — enrolling in Part A disqualifies you from making further HSA contributions (see HSA section below)

Medicare Part B (Medical/Outpatient Coverage)

Costs money ($202.90/month in 2026 for most people, more for higher incomes)
Can be delayed without penalty if you have qualifying employer coverage from a 20+ employee company
Late enrollment penalty if delayed improperly: 10% added to your premium for every 12-month period you were eligible but didn’t enroll — permanently

The HSA Problem: A Critical Trap for Still-Working 65-Year-Olds

If you have a Health Savings Account (HSA) through a High-Deductible Health Plan (HDHP), enrolling in Medicare — even just Part A — immediately disqualifies you from making further HSA contributions.

There’s an additional trap: Medicare Part A is retroactive up to 6 months when you enroll after age 65. This means if you sign up for Medicare at 66, your Part A coverage may be backdated to age 65½ — and any HSA contributions made during that retroactive period become excess contributions, triggering taxes and a 6% penalty.

What to Do If You Have an HSA

If you plan to enroll in Medicare, stop HSA contributions at least 6 months before you apply
Consult with your benefits advisor about the timing — this is one of the most common and costly Medicare mistakes made by still-working 65-year-olds

What Does NOT Count as Qualifying Coverage

These types of coverage do not allow you to delay Medicare without penalty:

Coverage Type	Can You Delay Medicare?
Active employer group health plan (20+ employees)	✅ Yes
Active employer group health plan (under 20 employees)	❌ No — enroll in Medicare
Spouse’s active employer plan (20+ employees)	✅ Yes
Spouse’s active employer plan (under 20 employees)	❌ No — enroll in Medicare
COBRA continuation coverage	❌ No
Retiree health coverage	❌ No
Marketplace/ACA coverage	❌ No
VA health coverage	❌ No (for Part B delay purposes)
Individual/private health insurance	❌ No

COBRA is a common mistake. Many people assume that because COBRA extends their employer coverage, it counts for Medicare delay purposes. It does not. Your 8-month SEP clock starts when your active employment ends — not when COBRA ends.

When You Retire: The Special Enrollment Period (SEP)

When you do eventually retire (or lose your qualifying employer coverage), you enter an 8-month Special Enrollment Period to sign up for Medicare Part B without penalty.

Key Rules for the SEP

The 8 months begins on the later of: the month employment ends OR the month employer coverage ends
You do not need to wait for an Annual Enrollment Period — the SEP overrides it
You can enroll any time during the 8 months — but earlier is better for coverage continuity
Do not wait the full 8 months if you want coverage to start promptly — there are processing delays

When Does Coverage Start Under the SEP?

If you enroll in the first month of your SEP: coverage begins that same month
If you enroll in months 2–8: coverage begins the month after you enroll

The Part B SEP Filing Options

You can enroll online at SSA.gov, by calling Social Security (1-800-772-1213), or in person at your local Social Security office. Have your employer complete the CMS-L564 form (Request for Employment Information) to document your qualifying coverage period.

What About Part D (Prescription Drug Coverage)?

If your employer’s health plan includes creditable drug coverage (coverage at least as good as Medicare’s standard Part D benefit), you can delay Part D enrollment without penalty.

Your employer is required to send you an annual notice stating whether their drug coverage is “creditable.” Keep these notices — you’ll need to document the creditable coverage period if you ever enroll in Part D later.

Late Part D penalty: 1% of the national base beneficiary premium for every month you went without creditable coverage. This penalty is also permanent and added to your Part D premium for life.

If you’re already collecting Social Security benefits when you turn 65, you are automatically enrolled in Medicare Part A and Part B — you don’t have to do anything.

You’ll receive your red, white, and blue Medicare card in the mail about 3 months before your 65th birthday.

If you’re still working and want to delay Part B, you must actively opt out — contact Social Security to decline Part B before it starts. You can re-enroll during your SEP when you eventually retire.

Step-by-Step: What to Do When You Decide to Retire

When retirement is on the horizon, here’s your action checklist:

Confirm your employer’s size (20+ or under 20 employees) and get documentation of your creditable coverage period
Notify your employer that you’ll be retiring — get a letter or CMS-L564 form confirming your employment and insurance dates
Stop HSA contributions at least 6 months before you plan to apply for Medicare
Enroll in Medicare Parts A and B — don’t wait longer than necessary; aim for the first or second month of your SEP
Choose your coverage path:
- Medicare Supplement (Medigap) + standalone Part D drug plan, OR
- Medicare Advantage plan (bundles Part A, B, and usually D)
Initial Enrollment Period for Medigap: Your Medigap open enrollment — where you can get any plan with no medical underwriting — runs for 6 months from the date your Part B begins. This window is critical and doesn’t repeat.
Cancel employer coverage — coordinate the end date to avoid gaps or overlaps

Oregon-Specific Notes

Oregon’s Birthday Rule applies to Medigap — once you’re on a Supplement plan, you can switch during your birthday month without underwriting, giving you more flexibility than most states
Oregon Insurance Division resources are available at 1-888-877-4894 (SHIBA — Senior Health Insurance Benefits Assistance) — free, unbiased counseling
Rodney is also available for a free, personalized Medicare enrollment review tailored to your specific situation

Common Mistakes to Avoid

❌ Assuming COBRA extends your delay window — it doesn’t. Your 8-month SEP starts when active employment ends.

❌ Delaying Part B when your employer has under 20 employees — Medicare becomes primary and you’ll have uncovered claims plus a penalty.

❌ Contributing to your HSA after enrolling in Part A — triggers excess contribution penalties.

❌ Waiting too long after retiring — missing your SEP results in a permanent Part B premium penalty and gaps in coverage.

❌ Missing the Medigap open enrollment window — if you delay Medigap past 6 months from Part B start date, insurers can deny coverage or charge more based on health.

❌ Thinking retiree coverage from your former employer counts — it doesn’t qualify for delaying Medicare.

Still Have Questions?

This is one of the most nuanced areas of Medicare planning — and the stakes are high. A wrong decision can mean permanent premium penalties, coverage gaps, or thousands in uncovered medical bills.

I offer a free 30-minute Medicare enrollment consultation where we walk through your specific situation — your employer, your coverage, your timeline — and build a plan that protects you from costly mistakes.

Schedule your free consultation:

📅 Book online at Calendly
📞 Call or text: 503-832-8555
✉️ Email: rod@legacywealthservices.com

Rodney Cummings, RSSA® is an independent Medicare advisor and Registered Social Security Analyst licensed in Oregon and 22+ states. Oregon Insurance License #18847712. This article is for educational purposes; individual situations vary.