Medicare 2026

Working Past 65: How Medicare Fits With Employer Coverage

If you're approaching 65 and still working — or your spouse is, and you're on their plan — you don't have to drop what's working. Medicare is designed to coordinate with employer coverage, but the rules depend on the size of the employer, the type of coverage, and whether the drug benefit counts as "creditable." A little planning now can save you from paying for coverage you don't need, and from late penalties later.

First, who pays first?

When you have both Medicare and an employer group health plan, one is the "primary" payer (pays first) and the other is "secondary" (may pay some of what's left). The rule is based on employer size:

• 20 or more employees: The group health plan generally pays first, and Medicare pays second.
• Fewer than 20 employees: Medicare generally pays first, and the group plan pays second.

That second rule matters a lot. If you work for a small employer, you may need Medicare in place when you turn 65 so your medical bills are covered the way you expect. Ask your HR or benefits administrator in writing how the plan coordinates with Medicare, and when you should enroll.

Should you take Part A at 65?

Part A (hospital insurance) is premium-free for most people who've worked long enough. If that's you and you're not contributing to a Health Savings Account (HSA), signing up for Part A at 65 is often straightforward.

One important caveat: once you're enrolled in any part of Medicare, you can no longer contribute new money to an HSA (you can still spend what's in it). If you or your employer are making HSA contributions and you want to keep doing that, you may choose to delay all of Medicare, including Part A, until those contributions stop. This is a personal planning decision worth discussing with your benefits office.

Delaying Part B while you're still working

Part B (outpatient and doctor coverage) has a monthly premium, so many people with solid employer coverage choose to delay it. If your coverage is a group health plan based on current employment (yours or your spouse's), you generally qualify for a Special Enrollment Period to sign up for Part B later without a late penalty.

That Special Enrollment Period lasts eight months, starting the month after the employment ends or the group coverage ends — whichever comes first. Signing up during that window keeps you penalty-free. Waiting past it can mean a lifelong Part B penalty and a gap in coverage.

Two common traps:

• COBRA doesn't count. Even though COBRA can continue your old employer plan after you leave a job, it isn't considered coverage based on current employment for Medicare's purposes. Your eight-month window starts when the job ends, not when COBRA ends.
• Retiree coverage doesn't count either. The same rule applies: once you retire, the clock starts.

If you're planning retirement, line up your Part B enrollment so coverage begins the month your employer plan ends.

What about Part D (prescription drugs)?

If your employer plan includes drug coverage that Medicare considers "creditable" — meaning it's expected to pay, on average, at least as much as standard Medicare drug coverage — you can delay Part D without a late penalty. Each year, your plan should send you a notice stating whether its drug coverage is creditable. Save those notices.

If your employer drug coverage is not creditable, enrolling in a Part D plan on time matters, because the late-enrollment penalty is calculated using a national base figure. For 2027, that base beneficiary premium is $41.33 per month, and the penalty is added to your Part D premium for as long as you have Part D.

A few other Part D facts worth knowing for 2027:

• The annual out-of-pocket cap on covered drugs is $2,400 (it's $2,100 in 2026).
• No Part D plan may charge a deductible higher than $700.
• Actual plan premiums, formularies, and pharmacy networks are set plan by plan and vary.

What hasn't been announced yet

The 2027 Part B standard premium and deductible, along with the IRMAA income-related surcharges that higher earners pay for Part B and Part D, had not been announced at the time this was written. CMS typically releases those figures in the fall. Check Medicare.gov for the current numbers before you make decisions tied to premiums.

For reference, the Social Security Administration announced a 3.6% cost-of-living adjustment for benefits beginning January 2027.

When you do move to Medicare: the big-picture choice

Once you're ready to use Medicare as your primary coverage, you'll generally pick one of two paths:

• Original Medicare (Parts A and B), often paired with a stand-alone Part D plan and sometimes a Medigap (Medicare Supplement) policy that helps with cost-sharing. You can generally see any provider that accepts Medicare, and referrals usually aren't required. Medigap premiums are an added monthly cost, and the ability to buy a Medigap policy without medical underwriting depends on timing.
• Medicare Advantage (Part C), a private plan that bundles Parts A and B (and usually Part D). These plans often use provider networks and may include extra benefits, but rules, costs, and networks vary by plan.

Neither path is universally better — the right fit depends on your doctors, your prescriptions, your travel patterns, your budget, and your tolerance for plan rules. Read the materials carefully before you choose.

Key dates

Annual Enrollment (Open Enrollment) for 2027 coverage runs October 15 – December 7, 2026, with changes taking effect January 1, 2027.

If you have Medicaid or Extra Help, you have a monthly Special Enrollment Period to switch to Original Medicare with a stand-alone Part D plan or to change stand-alone Part D plans. Full-benefit dual-eligible individuals can join an integrated D-SNP in any month.

Where to go next

For official rules, enrollment tools, and the plan finder, visit Medicare.gov, or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.

This article is educational and independent. It is not affiliated with or endorsed by any government agency.