With more than 25% of those 65 and older still working, turning 65 no longer means retiring and enrolling in Medicare. This raises the question of, if you qualify for Medicare, do you have to take it even if you’re still employed? The answer depends on the size of the company you work for, which determines whether Medicare would be your primary or secondary insurance.

If you’re turning or have already turned 65 and are eligible for Medicare but still working, it can help to understand your options and ensure you have the healthcare coverage you need when you need it.

But first, it's important to note that no employer can force an employee to do anything, including signing up for Medicare. Even Medicare can't force you to sign up for Medicare! The following explains guidelines from the Centers for Medicare & Medicaid Services (CMS). Specifically, who pays first when you have both Medicare and an employer plan, and when you can delay Medicare enrollment without incurring late fees.

Medicare vs. employer insurance

Whether you must enroll in Medicare when you’re eligible or face late penalties depends on the size of the company sponsoring the group health plan. In addition, the employed person (you or your spouse) must be actively employed. If the group health insurance is through a retirement plan, Medicare is always the primary payer.

20 or more employees

If you work for a company that has more than 20 employees, the company must offer the same health insurance coverage to those who are 65 and older as it does to younger employees. This means the company cannot force you to enroll in Medicare even when you are eligible or offer incentives for you to do so.

You may:

• Choose to keep the group health coverage and delay Medicare enrollment, or
• Have employer coverage as primary and enroll in Medicare for secondary insurance, or
• Drop the employer coverage and enroll solely in Medicare. The exception is those who turn 65 and have end-stage renal disease (ESRD), in which case the employer can require you to get Medicare.

If you delay enrollment in Medicare, you must sign up for Part A and Part B when your employment ends or the group plan coverage stops; otherwise, you face late penalties when you enroll later. When employer coverage ends, you have a Special Enrollment Period of up to 8 months to sign up for Medicare.

Note that you can’t delay Medicare enrollment without penalty if your employer-sponsored coverage comes from retiree benefits or COBRA, as these do not count as active employment. It also doesn’t count if you work beyond age 65 but receive retiree benefits from a former employer. You or your spouse must be actively working for the employer that provides your health insurance in order to delay Medicare enrollment without owing the late penalty.

If you choose to sign up for Medicare and have employer coverage that is primary, you will have to pay the Medicare Part B premium of $174.40 per month (in 2024). Of course, your out-of-pocket costs will be minimal (and may be zero). Whether that's worth the monthly premium depends on your unique situation.

However, we nearly always recommend applying for Medicare Part A if you qualify for premium-free. The only exception is if you contribute to a health savings account (HSA). You may not contribute to a health savings account and have any part of Medicare. If you have an HSA and plan to sign up for Medicare when you turn 65, talk to your benefits administrator.

20 or fewer employees

If you work for a company with fewer than 20 employees, the group health plan sponsored by your employer becomes the secondary payer when you become eligible for Medicare, making Medicare the primary payer.

When Medicare is the primary payer, your employer-sponsored plan only pays whatever is owed after Medicare pays its share. Typically, this amounts to 80% of the Medicare-approved amount for a particular service. If you don't sign up for Medicare, your employer plan would pay its 20%, leaving you responsible for what should have been Medicare's 80%. That's why we encourage people to enroll in Part A and Part B when they're eligible.

In this case, you have two options:

• Discontinue the group plan and enroll only in Medicare.
• Enroll in Medicare and continue with your group plan coverage, which would become secondary to Medicare. You would have to enroll in Medicare Part A and Part B during the Initial Enrollment Period. If the group plan has creditable drug coverage (which means it provides comparable benefits and would pay about the same as a Part D plan would), you can keep that coverage and do not have to enroll in a Medicare prescription drug plan. If not, you must enroll in a Part D plan as well or risk paying lifelong late fees.

It's important to talk to your benefits administrator about plan-specific details. For example, in some cases, your employer can choose to cancel your workplace plan instead of keeping it as a secondary payer. In that event, you might decide you want to sign up for a Medigap supplement plan as soon as you're eligible, or maybe switch Medicare Advantage instead. Understanding the rules at your employer helps you make those decisions.

What are primary and secondary coverage?

As discussed above, if you turn 65 and are still working, you need to understand whether employer coverage or Medicare is primary or secondary. Primary coverage pays for eligible claims first, and secondary coverage helps pay the remaining amount.

• Medicare is the primary insurance if you work for an employer with fewer than 20 employees. This means you must enroll in Medicare when you’re eligible because Medicare will pay for eligible health insurance claims first, before your employer group plan does. That makes your employer group plan the secondary coverage.
• Your employer group plan is primary if the employer has more than 20 employees. If you choose to enroll in Medicare - which is not required - Medicare would become secondary. This is the case as long as you remain actively employed. Claims should be submitted first to the employer’s plan and then to Medicare, so you should alert your provider to your secondary coverage (if you choose to also enroll in Medicare).

Can you have Medicare and employer insurance?

Yes, you can have Medicare and employer insurance. When deciding which health insurance option is best for you, consider asking your employer plan provider the following questions:

• Can I drop employer coverage? Are there any negative consequences to doing so?
• If I keep employer coverage, does it continue as primary payer of covered health insurance claims?

To learn more about how income from employment may impact Medicare premiums, and actions Medicare-eligible employees can take when they turn 65, contact the Social Security Administration (SSA) and/or the Centers for Medicare & Medicaid Services (CMS).

Is Medicare mandatory when you turn 65?

Medicare is not mandatory when you turn 65, though whether you must pay a late enrollment penalty when you do sign up depends on a number of circumstances.

• If you’re turning 65 and aren’t getting benefits from Social Security or the Railroad Retirement Board (RRB) at least 4 months before you turn 65, you need to sign up for Medicare Parts A and B during your Initial Enrollment Period or face a late enrollment penalty.

However, if your employer is large enough, you can keep your group health coverage until you retire and enroll in Parts A and B later without having to pay a penalty.

• If you’re over 65, you typically don’t need to do anything until you retire or lose your employer coverage. If you didn’t enroll in Part A and B when you were first eligible, the size of your employer will determine whether you have to pay a late enrollment penalty.
• If you’re under 65 and have a disability, you don’t need to do anything until you retire or lose employer coverage. If you didn’t enroll in Parts A and B when you were first eligible, the size of your employer will determine whether you have to pay a late enrollment penalty.

When should I enroll in Medicare?

In most cases, you should enroll in Medicare when you first become eligible. This is called your Initial Enrollment Period. It lasts through the 3 months before the month you turn 65, the month you turn 65, and the 3 months after your birthday month.

However, if you have eligible group health coverage when you become eligible for Medicare, you can delay enrollment in Medicare without facing a penalty as long as you have primary employer group health coverage.

You must also have creditable drug coverage, or you must enroll in Medicare Part D. Otherwise, you could face a late enrollment penalty.

Additional resources

• ClearMatch Medicare: Find a Medicare Plan
• Medicare.gov: Costs