Can I Have Medicare When I'm Employed?

Can I Drop My Employer Health Insurance and Go on Medicare

Employment plays no role in Medicare eligibility. As long as you're 65 or older, you can sign up for Medicare.

If you are a United States citizen aged 65 or older, you're eligible for Medicare – even if you already have a group health plan (GHP) through your job. So the answer is yes, you may drop your employer health insurance to go on Medicare (assuming you're at least 65).

If you are a United States citizen aged 65 or older, you're eligible for Medicare – even if you already have a group health plan (GHP) through your job. So the answer is yes, you may drop your employer health insurance to go on Medicare (assuming you're at least 65).

This page describes how Medicare works if you have health coverage as part of your employment benefits. Please note that the following information also applies if the employer coverage is via your spouse.

Can I have both employer insurance and Medicare?

Yes, you may have both Medicare and employer insurance.

When you have both Medicare and employer coverage, the main question is who pays first. That entity is known as the primary payer. As the name implies, the primary payer pays first. The secondary payer then pays whatever amount is left over. Whatever amount remains (if any) is your out-of-pocket cost for the service.

Primary payer vs. secondary payer

Answering the primary vs. secondary payer question depends on the size of the company.

  • If the company employs 20 or more people, Medicare is the secondary payer
  • In companies with fewer than 20 employees, Medicare is the primary payer

When Medicare is the primary payer, failure to sign up when you turn 65 leaves you vulnerable to late enrollment penalties.

Delaying Medicare enrollment could also leave you owing substantial medical bills. Remember, the secondary payer only pays after the primary payer handles its share. If your healthcare provider sends a bill directly to your private health plan without Medicare paying its share first, the private insurance company returns the invoice unpaid. That leaves you owing what should have been Medicare's share, which is usually around 80% of the total bill.

Medicare and employer coverage

Medicare coverage includes two parts. Also known hospital insurance, Medicare Part A covers inpatient services received in a hospital or skilled nursing facility (SNF) as well as hospice care. Medicare Part B is sometimes called medical insurance. It covers outpatient services, like doctor visits, lab work, and durable medical equipment (DME). Together, Parts A and B make up Original Medicare.

You can get prescription drug coverage with a Medicare Part D plan. While joining a Part D plan is optional, if you delay enrollment and don't have creditable drug coverage elsewhere, you face lifelong late penalties. Creditable means a plan that is comparable to Medicare in terms of both price and coverage.

Medicare and private insurance

Medicare and Medicaid are government-run health insurance programs. Private insurance means any healthcare plan sold by a private insurance company.

If your private insurance plan is provided by an employer, the above rules regarding primary and secondary payers applies. There is no other type of private health insurance in which Medicare is secondary payer. This includes COBRA, retiree health plans, and coverage via the ACA Marketplace. If you have one of these plans, Medicare is primary payer with your private insurance paying secondary.

What are your options?

If you qualify for Medicare when you already have employer health insurance, you have a few options.

  • Drop your group health plan to enroll in Original Medicare: If you go this route, you may want to consider adding a Medigap plan to help cover your out-of-pocket costs. You should also add a Medicare Part D plan to ensure you have prescription drug coverage (and don't owe the Part D late enrollment penalty).
  • Drop your group health plan to enroll in a Medicare Advantage plan: If you like the extended benefits you get with a group health plan but don't want the hassle of primary/secondary payers, a Medicare Advantage plan may the right option for you. Nearly 99% of Advantage plans provide additional coverage, including prescription drugs, vision, and dental care.
  • Keep your employer coverage and enroll in Original Medicare: Make sure you talk to both the Medicare program and your employer's benefits administrator to ensure coordination of benefits goes smoothly.
  • Stick with employer coverage only: If your company employs more than 20 people, you may delay Medicare enrollment without incurring late penalties. Once your employer coverage ends, you'll qualify for a Special Enrollment Period (SEP) during which you may sign up for Medicare.

If you're like most people, you qualify for premium-free Medicare Part A. In that case, we nearly always recommend signing up for Medicare Part A as soon as you turn 65 – even if you have creditable coverage through an employer. It costs you nothing and could save you a bundle if you require hospital care.

The only time we don't recommend signing up for Part A is if you have employer coverage and contribute to a health savings account (HSA). That's because you cannot have any part of Medicare and continue contributions to an HSA. However, if it's your spouse's HSA, you can have Part A and your spouse can continue making contributions.

The cost of your group health plan, benefits, and your own medical history all play a role in determining which is the best option for your unique needs.

What will you pay for Medicare?

Like most health insurance, Medicare uses a cost sharing model that includes deductibles, premiums, and copays or coinsurance.

Medicare Part A costs

The vast majority of Medicare beneficiaries do not have a premium for Part A. However, if you or your spouse did not work the required 40 quarters or 10 years to qualify, the Medicare Part A premium in 2024 is $505. The Part A deductible for inpatient care is $1,632 per benefit period. A benefit period begins the day you're admitted as an inpatient and continues until you go 60 consecutive days without receiving inpatient care.

Medicare Part A costs also include coinsurance. The amount varies according to the length of your hospital stay.

  • Days 1 through 60: $0 per day
  • Days 61 through 90: $408 per day
  • Days 91 through your lifetime reserve days: $816 per day

If you don't have a Medicare Supplement plan (also known as Medigap), you get 60 lifetime reserve days. Medigap beneficiaries get an additional 365 lifetime reserve days for inpatient care.

Medicare Part B costs

The standard Medicare Part B premium is $174.40 in 2024. There is also an annual deductible of $240 which beneficiaries must meet before Medicare begins paying its share. Medicare Part B coinsurance is usually around 20% of the Medicare-approved cost.

Other Medicare costs

Medicare Advantage, Medigap, and Medicare Part D plans are all provided by private insurance companies. That means that costs vary according to the plan and provider you choose. Check your individual plan to determine your deductibles, premiums, and copays.

Compare Medicare plans in your area now

Please note that, even if you sign up for a Medicare Advantage plan, you still have to pay the Medicare Part B premium every month.

When can you sign up for Medicare?

Unless you qualify due to a disability, you're first eligible to sign up for Medicare during your Initial Enrollment Period (IEP). It lasts for 7 months, beginning 3 months before your 65th birthday. So, if you turn 65 in April, your IEP begins on January 1 and ends on July 31.

Unless you began collecting Railroad Retirement Board (RRB) or Social Security benefits at least 4 months before turning 65, you have to apply for Medicare. You do this through the Social Security Administration (SSA) by clicking here. You can also call 1-800-772-1213 (TTY 1-800-325-0778). Please note that it's always a good idea to call your local Social Security office to schedule an appointment, if you prefer to sign up for Medicare in person.

During your Initial Enrollment Period, you can sign up for Medicare Parts A and B, join a prescription drug plan, or enroll in a Medicare Advantage plan.

If you choose to remain with your employer group plan AND your company employs 20 or more people, you'll qualify for a Special Enrollment Period. This begins on the later of the following dates:

  • The date your employment ends
  • The date your employee coverage ends

There are dozens of ways to qualify for a Special Enrollment Period. Find the full list and guidelines on here.

Our Find a Plan tool makes comparing Medicare plans easy. Just enter your location and coverage start date to review options in your area.

What happens if you delay Medicare enrollment?

If you miss both your IEP and your SEP, you likely have to wait for the General Enrollment Period (GEP) that occurs every year from January 1 through March 31. It is for people who qualify for Medicare Part A and/or Part B but are not currently enrolled in one or both parts. You can use General Enrollment to sign up for Parts A and B. Then, you have from April 1 through June 30 to join a Medicare Part D or Medicare Advantage plan. All coverage options take effect on July 1, which can lead to coverage gaps.

You also face lifelong late enrollment penalties when you do finally sign up for Medicare Part B and Medicare Part D. There is also a late fee for Medicare Part A, but you only owe that if you're one of the few people who don't get premium-free Part A.

Additional resources

Florida native Eric Ruge lives by one rule: Do the right thing. His goal as a Medicare agent is helping people find the right Medicare coverage for their unique medical needs and budget. He believes everyone deserves the peace of mind they get knowing they made the right decision about their Medicare coverage. When he's not working, Eric enjoys spending time with family and friends, watching Tampa sports, and playing the occasional round of golf.


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