Published: | Last reviewed: November 2026 by Jeff Judge, CFP®
Part of our guide: How do I get health insurance between early retirement and Medicare?
Medicare while still working is not something you can safely skip on instinct. If you are 65 or older and covered by a group health plan through your own or your spouse's current job, you can often delay Medicare Part B without a penalty, but only when that employer has 20 or more employees. At a smaller employer, waiting can leave you with coverage gaps and a surcharge you carry for life. Company size decides which rule applies to you, and most people skip that check.
Key Takeaways
- Employers with 20 or more employees let you delay Part B without penalty, while smaller employers can leave Medicare as your primary payer at 65.
- Missing a required Part B window adds 10% for each full 12 months, plus the CMS standard premium of $202.90 in 2026.
- Your special enrollment period runs 8 months from when work or job-based coverage ends, and COBRA does not extend it.
- Medicare coverage stops new HSA contributions, even though the 2026 HSA limit is $4,400 for self-only coverage.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has been helping families and business owners in Harford County and the Baltimore metro area navigate Medicare timing and retirement healthcare decisions since earning his CFP® certification in 2013, by using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "Most of the expensive Medicare mistakes I see start with someone assuming a rule applied to them without ever checking how many people their employer has."
Can you really skip Medicare while still working past 65?
Sometimes, but only if two things are true: your coverage comes from a current job (yours or your spouse's), and the employer is large enough for that plan to stay primary. When Medicare and employer coverage overlap, one of them pays first. If the group plan pays first, Medicare Part B can wait. If Medicare pays first, the employer plan may pay as though Medicare is already covering its share, whether or not you have enrolled.
That is where the size of the company comes in. According to Medicare.gov, when your employer has fewer than 20 employees, your job-based coverage might not pay for health services unless you have both Part A and Part B. With 20 or more, you can wait on Part B and use a special enrollment period later. Call it the Medicare 20 employees rule if you like. Either way, it is the single detail people skip, because "I have insurance through work" feels like a complete answer. The rules do not care how reasonable the assumption was.
Does a spouse's job count? Yes. Medicare.gov's sign-up questions ask whether you or your spouse is still working for the employer providing your coverage, and the same employer-size test applies to the spouse's plan.
Should you take Part A while you wait on Part B? Often, yes. Most people pay no premium for Part A, and Medicare.gov notes you may want to sign up for it at 65 even while working. Part B carries a monthly premium, which is why people choose to wait. If you want a refresher on the pieces, see Medicare Parts A, B, C, and D Explained Simply. The main exception is an HSA, which we cover below.
What does missing the window cost for Part B and Part D?
A missed Part B window costs you 10% of the premium for every full 12-month period you could have enrolled and did not. Medicare.gov is direct that late enrollment penalties are "not a one-time late fee", and the Part B surcharge lasts as long as you have Part B, which for most people means for life.
Here is how the math works using the 2026 CMS figures. Medicare.gov's own example is two full years late: a 20% penalty on the $202.90 standard premium adds $40.58, for a monthly Part B premium of $243.48 (Medicare.gov rounds the billed amount to $243.50). Run the same arithmetic for a three-year delay and the 30% surcharge is about $60.87 a month, or roughly $730 a year, before any premium increases. Over a 20-year retirement that is more than $14,000 at today's premium alone, and the premium has historically moved up over time. These are illustrations based on the 2026 premium, not a prediction of your cost.
Part D has its own clock. You pay an extra 1% for each month, or 12% a year, if you do not join a Medicare drug plan when first eligible and then go 63 days or more without creditable drug coverage. The penalty is calculated from the national base beneficiary premium, which is $38.99 in 2026, and it is added for as long as you have Medicare drug coverage. Creditable coverage means drug coverage expected to pay, on average, at least as much as Medicare's. Ask your benefits administrator in writing whether your employer's drug coverage qualifies.
Jeff Judge has watched people discover this penalty years later with no way to undo it, because the rules were followed exactly as written, just not by them. If you want the full mechanics of how it is calculated and removed (or not), our post on how to avoid the Medicare late enrollment penalty goes deeper.
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When does the special enrollment period start, and what ends it?
Your initial enrollment period is seven months: the three months before your 65th birthday month, the birthday month itself, and the three months after. If you have qualifying job-based coverage, the special enrollment period lets you enroll later without penalty. Per Medicare.gov, you can sign up anytime while you or your spouse are still working for that employer, or up to 8 months after the work or the job-based coverage ends, whichever happens first.
The trap is what does not stop that clock. Medicare.gov states your 8-month period starts when you stop working, even if you choose COBRA or other coverage that is not Medicare. Retiree coverage does not let you delay either. If you are no longer working for the employer, the guidance is to sign up when you are first eligible.
| Your situation | What Medicare.gov says |
|---|---|
| Still working, employer has 20 or more employees | Sign up for Part B any time while working, or within 8 months after work or coverage ends, whichever is first |
| Still working, employer has fewer than 20 employees | Check with the employer; the plan might not pay without both Part A and Part B |
| Stopped working, now on COBRA | The 8-month clock started when you stopped working; COBRA does not pause it |
| Stopped working, retiree coverage only | Sign up when you are first eligible |
If you want Medicare to start the day job-based coverage ends, the timing matters. Medicare.gov says to sign up for Part B the month before you plan to retire, with coverage starting the month after Social Security receives your completed forms, including an extra form showing you had job-based coverage. Miss the 8-month period and you wait for a general enrollment period, go months without coverage, and likely pay the penalty as well.
If your last day of work comes before your 65th birthday, you face a different problem, which our guide to health insurance between early retirement and Medicare covers.
How does an HSA change Medicare timing while you work?
Once Medicare coverage starts, you can no longer make new HSA contributions, and that includes Part A. The IRS puts it plainly: "Beginning with the first month you are enrolled in Medicare, your contribution limit is zero." The rule also applies to retroactive Medicare coverage, so if you delay applying and your enrollment is later backdated, contributions made during the backdated period are treated as excess.
That catches a specific group. Part A is premium-free for most people, since CMS ties it to 40 quarters of Medicare-covered employment, and many people are enrolled in it without a second thought. If you are still working, still funding an HSA, and plan to delay Medicare, the interaction needs to be on your radar. The 2026 contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, according to IRS Rev. Proc. 2025-19.
Do you have to stop HSA contributions before you enroll? Contributions are not allowed starting with the first month of Medicare coverage, and because Part A can be backdated, build a buffer and coordinate the timing with your tax advisor before you apply.
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It is a small detail with outsize consequences. It also shows why Medicare is not one on-off switch. It is a set of separate decisions, each with its own date.
What should Harford County workers check before turning 65?
Around Forest Hill, Bel Air, and the rest of Harford County, this question shows up in three different workplaces. Civilians at Aberdeen Proving Ground and employees at Johns Hopkins work for employers far above the 20-employee line, but size is only half the test. You still need to confirm the plan is based on your own or your spouse's current employment, and ask what it does once you stop. Meanwhile, plenty of households in Harford and northern Baltimore County run on a family business, a contracting company, or a small professional office, where headcount may sit under 20 and the answer flips.
Here is the checklist we use:
- Months before you turn 65, get the employer's headcount and how the plan coordinates with Medicare in writing from HR or your benefits administrator. Do not guess, and do not rely on a coworker's situation, which may differ from yours.
- If you work at a smaller employer, treat your 65th birthday as a real deadline and enroll during your initial enrollment period unless you have confirmed in writing that you genuinely qualify to wait.
- If you are delaying because of large-employer coverage, mark the 8-month special enrollment period on your calendar. The moment you retire or the plan ends, the clock starts.
- Ask whether your employer's drug coverage is creditable, because Part D has its own lifetime penalty.
The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. Medicare dates belong in the first step, before any of them are missed, because this is purely a matter of knowing the rules and the dates. There is no market risk and no judgment call about strategy. Jeff Judge tells clients to spend one afternoon confirming exactly how the employer plan interacts with Medicare, and to put every enrollment window on the calendar. One phone call to HR can prevent a cost that follows you for the rest of your life.
Frequently Asked Questions
Do I need Medicare at 65 if I'm still working?
Not always. If you have coverage through a current job at an employer with 20 or more employees, you can delay Part B without a penalty and use a special enrollment period later. At a smaller employer, Medicare may pay first, so delaying could leave gaps. Confirm your employer's size and plan rules in writing before deciding.
What happens if my employer has fewer than 20 employees?
Medicare may become your primary payer at 65, which means your job-based plan might not pay for services unless you have both Part A and Part B. Delaying Part B can then produce uncovered bills and a late enrollment penalty. Ask HR how the plan coordinates with Medicare, and enroll during your initial enrollment period unless the answer clearly says otherwise.
Does COBRA or retiree coverage let me delay Part B?
No. COBRA and retiree coverage do not extend your Part B timing, and Medicare.gov says the 8-month special enrollment period starts when you stop working even if you choose COBRA. If you rely on either one past that window, you could face months without Part B and a lifetime penalty that grows the longer you wait.
How long do I have to enroll after I stop working?
You have up to 8 months after you or your spouse stop working, or after the job-based coverage ends, whichever happens first. During that window you can enroll in Part B without the late enrollment penalty. The safest approach is to sign up the month before you retire so coverage can begin when the employer plan ends.
Can I keep contributing to my HSA once Medicare Part A starts?
No. Beginning with the first month you are enrolled in any part of Medicare, your HSA contribution limit is zero, and that applies to retroactive coverage as well. If you plan to keep funding an HSA while you work past 65, talk with your tax advisor about timing your Part A enrollment before you apply.
Is the Part D penalty different from the Part B penalty?
Yes. The Part D penalty is 1% of the national base beneficiary premium for each month you went without creditable drug coverage, 63 days or more, and it is added for as long as you have Medicare drug coverage. The Part B penalty is 10% of the Part B premium for each full 12-month period you delayed.
Bottom Line
The decision that matters is not whether to enroll in Medicare at 65. It is whether you have confirmed, in writing, which side of the 20-employee line your employer sits on and when your clock starts if the job ends. Ready to put a plan around Medicare while still working? Jeff Judge and the Chesapeake team serve families and business owners across Harford County and the Baltimore metro. Schedule a free fit call at chesapeakefp.com.
A version of this article originally appeared in Kiplinger.
Disclosures
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