Working Past 65: How Medicare Fits With Job Coverage

If you keep working past 65 and have group health coverage through your own or your spouse's current job, you may be able to delay Part B without a penalty. The key is employer size. With 20 or more employees, the group plan usually pays first and Medicare second, so many people take premium-free Part A and wait on Part B. With fewer than 20 employees, Medicare usually pays first, and you generally need Part B as soon as you are eligible. When the job or the coverage ends, you have an 8-month Special Enrollment Period to sign up for Part B.

Who pays first

Always confirm with the employer's benefits administrator in writing. Some small employers belong to a multi-employer plan with different rules.

Source: NJ Medicare Supplement coverage for people between ages 50 and 65 on Medicare due to disability (September 2026).

Should you take Part A while still working?

Part A is premium-free for most people, so many take it at 65 even while working. It can pay secondary to your group plan on a hospital stay. The exception is a Health Savings Account: once any part of Medicare starts, you can no longer contribute. If you want to keep funding an HSA, delay both Part A and Part B, and do not start Social Security retirement benefits, which enroll you in Part A automatically.

When you later enroll in Part A after 65, it can be backdated up to six months (never earlier than the month you turned 65). Stop HSA contributions six months before you apply to avoid a tax penalty on contributions made after coverage began.

Drug coverage while you work

Your employer must tell you each year whether its drug coverage is "creditable", meaning at least as good as standard Part D. If it is, you can delay Part D without a penalty. Keep those notices: you may need to show them when you join a Part D plan later.

If the coverage is not creditable, consider joining Part D during your Initial Enrollment Period, because the penalty is 1 percent of the national base premium ($38.99 in 2026) for every full month you go without.

When you retire: the steps in order

• About two to three months before your coverage ends, ask your employer to complete form CMS-L564 (Request for Employment Information).
• Complete form CMS-40B (Application for Enrollment in Part B) and submit both to Social Security, online, by mail or in person. Ask for Part B to start the day after your group coverage ends.
• Use the 8-month Special Enrollment Period, which starts the month after your employment or coverage ends, whichever comes first. Do not count on COBRA to stretch it: COBRA does not extend the 8 months.
• Join a Medicare Advantage or Part D plan within 2 months after the group coverage ends.
• If you want a Medicare Supplement, apply as soon as Part B starts. Your six-month Medigap Open Enrollment Period begins the first month you have Part B and are 65 or older, so delaying Part B also delays, and protects, that window.

Common mistakes Jackie sees

• Assuming COBRA or retiree coverage lets you delay Part B. It does not, and the Part B penalty can follow you for life.
• Taking Social Security at 66 or 67 while still contributing to an HSA, which starts Part A and makes later contributions excess.
• Waiting until the last month of the 8-month window and leaving a gap with no coverage.
• Forgetting a spouse: if your spouse is covered on your plan and is under 65, they need their own coverage when you retire. Ask HR about COBRA and the date their coverage ends, and plan the bridge before your last day.

A worked example with dates: retiring at 66

Here is a hypothetical, not a real client. Sam lives in South Jersey, turns 65 in April 2027, and works for a company with about 200 employees. Sam has family coverage there, contributes to an HSA, and plans to retire on September 30, 2028. Applying the federal rules from Medicare.gov:

Illustration, not a quote: a hypothetical example using figures from NJ Medicare Supplement coverage for people between ages 50 and 65 on Medicare due to disability (September 2026).

What a mistake costs: the Part B penalty in dollars

The Part B late enrollment penalty is 10 percent of the standard premium for each full 12 months you could have had Part B and did not, and you pay it for as long as you have Part B (Medicare.gov). It applies when the coverage you relied on was not coverage from current work, for example retiree coverage, COBRA, or a group plan at an employer with fewer than 20 employees where Medicare should have paid first.

Using 2026 figures: someone who goes 26 months without Part B has two full 12-month periods, so a 20 percent penalty. That is $40.60 a month on top of $202.90, a $243.50 premium, or $487.20 extra a year, and the penalty grows whenever the standard premium grows. A Part D gap works the same way at 1 percent of the national base premium per month: 20 months without creditable drug coverage adds $7.80 a month in 2026 (20 percent of $38.99, rounded to the nearest 10 cents).

Kidney failure and disability: different rules

If you are under 65 and have Medicare because of a disability, the employer group plan pays first only when the employer has 100 or more employees. If you have Medicare because of End-Stage Renal Disease, Medicare.gov describes a 30-month coordination period in which your employer or union group plan pays first, whatever the employer size; after 30 months Medicare pays first. Confirm the dates with the plan before you drop anything.

If you are under 65 and later want a Medicare Supplement, remember New Jersey's rule: companies must offer Plan D to people on Medicare because of a disability, and they cannot turn you down during your first 12 months of Part B. Delaying Part B while you have group coverage from current work keeps that window ahead of you.

Questions Jackie asks, and you should ask HR

• How many employees does the company have, counted the way Medicare counts them, and is the plan part of a multi-employer group?
• Does the plan pay first or second once I am 65 and eligible for Medicare? Can I have that in writing?
• Is the drug coverage creditable? Please send the yearly notice.
• On what exact date does my coverage end when I retire: the last day of work, or the end of that month?
• Will my spouse lose coverage on the same date, and is my spouse under 65?
• Who in HR signs form CMS-L564, and how long does it usually take?

Income and IRMAA in your last working years

Medicare premiums are based on your tax return from two years earlier, so your highest-earning years can raise your Part B and Part D premiums right after you retire. In 2026, IRMAA starts above $109,000 of modified adjusted gross income for a single filer or $218,000 joint (CMS, 2026). If your income has dropped because you stopped working, file form SSA-44 with Social Security to ask for a new decision based on your current income.

---

The bottom line

Find out your employer's size and whether its drug coverage is creditable, decide about Part A with your HSA in mind, and when the job ends, file CMS-40B and CMS-L564 so Part B starts the day after group coverage stops. Treat the end of work as your real Medicare start date, including your one-time Medigap window. Jackie helps New Jersey clients map this out a few months ahead, so nothing lapses.