Key Points
- If you actively work for an employer with 20 or more employees and are covered under that employer’s insurance, you can likely delay Medicare past 65 without penalty.
- Working for an employer with less than 20 employees does not count as having creditable coverage, so you will likely want to sign up for Medicare when you are first eligible to avoid penalties.
- Retiree coverage, including COBRA, does not count as creditable coverage for Medicare.
If you are 65+ (or turning 65 soon) and will have both Medicare and Employer Coverage because you are still actively working, you will have a number of things to think through.
You likely have options to keep your employer insurance and Medicare will coordinate with that coverage. You’ll also want to compare the cost of that employer coverage against what it would cost you to roll over to Medicare as your primary insurance.
Doing your research will help you decide on which coverage option is most cost-effective. It can also help you avoid any Medicare late enrollment penalties wherever possible. Again, this info below is for beneficiaries age 65 or older. (Medicare coordination rules are different for people under age 65 on Medicare due to disability.)
Active Employer Coverage
Active employer coverage means you are still actively working, not retired. In this scenario, you have the right to remain on your employer’s group health insurance plan if you choose. Your Medicare benefits can coordinate with that coverage. HOW it coordinates depends on the size of your employer.
These same rules apply if your group health coverage is through your spouse’s employer.
Medicare and Employer Coverage – Large Companies 20+ Employees
Medicare is secondary if you are age 65 or older and your employer has more than 20 employees and you are still ACTIVELY working (not a retiree or on COBRA). This is called Medicare Secondary Payer. In this scenario, your group plan pays first, and then Medicare pays second. (People under 65 on Medicare, click here for different rules).
Most active employees with group coverage enroll in Part A because it is premium-free if you have worked at least ten years. Part A can coordinate to lower your costs if you have a hospital stay. For example, let’s say your employer health plan has a $3,000 deductible. The Medicare Part A hospital deductible is $1,600 in 2023. So if you have both your employer insurance and Part A, and you incur a bill for a hospital stay, you will only be out $1,600 for your inpatient hospital services. Medicare pays the rest of any Part A services.
