Working Past 65: Medicare and Employer Coverage

Who pays first: the employer-size rule

When you have both Medicare and a job-based plan, one pays first (the primary payer) and the other picks up some of what is left (the secondary payer). Medicare's who pays first page sets out the rule for people 65 and older covered through current employment, their own or a spouse's.

Source: Medicare.gov, Who pays first?; Medicare.gov, When can I sign up for Medicare? Current rules, checked October 19, 2026.

The small-employer row is the one that hurts people. Medicare.gov says that if the employer has fewer than 20 employees, the job-based plan may not pay for services unless you have both Part A and Part B. South Dakota has many small businesses, family farms and clinics. If yours is one, ask the plan administrator in writing before you assume anything.

If you are under 65 and on Medicare because of a disability, the threshold is different: a large group health plan, meaning an employer with 100 or more employees, pays first, according to Medicare.gov.

Should you take Part A at 65 anyway?

Most people qualify for premium-free Part A through 40 quarters of Medicare-taxed work by themselves or a spouse. Because it costs nothing in premiums, many working people take Part A at 65 and delay only Part B. It can act as secondary hospital coverage.

The exception is anyone contributing to a Health Savings Account (HSA). Once any part of Medicare starts, you can no longer contribute to an HSA, though you can still spend what is in it. Medicare.gov says that if you sign up for premium-free Part A after 65, coverage starts up to 6 months back from when you sign up, but not earlier than the month you turned 65. So stop HSA contributions about 6 months before you apply.

For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage, set in IRS Rev. Proc. 2025-19. In the year Medicare starts, the limit is prorated by the months you were eligible, as IRS Publication 969 explains.

Source: Big Sioux Benefits calculation: $4,400 x eligible months / 12, per IRS Publication 969. Illustrative; ask your tax preparer.

The 8-month Special Enrollment Period

If you delay Part B because of group coverage based on current work, you get a Special Enrollment Period (SEP). The CMS Medicare & You 2027 handbook describes it: you can sign up any time while you have that coverage, or during the 8 months that begin the month after the employment or the coverage ends, whichever happens first.

Medicare.gov's sign-up page is specific about COBRA: your 8-month window to sign up for Part B starts when you stop working, even if you choose COBRA or other coverage that is not Medicare. Wait for COBRA to run out before signing up, and you may have missed it.

To avoid a gap, sign up for Part B the month before your group coverage ends. Medicare.gov says that if you want Medicare to start when job coverage ends, you should sign up the month before you or your spouse retire.

The paperwork when you retire

When you sign up for Part B during the SEP, Social Security needs proof that you had group coverage based on current employment. Medicare lists two forms on its enrollment forms page:

• CMS-40B, the application for Part B.
• CMS-L564, the request for employment information, which your employer completes to confirm the dates of your group coverage.

Ask your employer's benefits office for the CMS-L564 a couple of months before your last day, especially if HR is in another state. Keep copies of both forms and of any letters from Social Security.

Drug coverage while you work

For Part D, the question is whether your job-based drug coverage is creditable, meaning expected to pay at least as much as Medicare's standard drug coverage. Medicare.gov's working past 65 page says you will not pay a Part D penalty as long as you are never without creditable drug coverage for more than 63 days in a row.

Employers send a notice each year saying whether their coverage is creditable. File it with your tax papers. The penalty, if you ever owe one, is 1% of the national base beneficiary premium for each month without coverage, and that base is $41.33 for 2027.

Medigap timing if you delay Part B

Your 6-month Medigap open enrollment period starts the first month you are 65 or older and enrolled in Part B, according to Medicare.gov. If you delay Part B while working, that window waits too, so you keep the right to buy any Medigap policy sold to you without health questions for 6 months after Part B begins. Once it starts, it does not pause, so pick the start of Part B with your supplement in mind.

If you lean toward Medicare Advantage instead, read our Medicare Advantage vs Medigap guide before you decide. The 2026 standard Part B premium you will pay either way is $202.90 a month, according to CMS.

Figures and sources

Every figure on this page, where it comes from, and the period it covers. Checked October 19, 2026.

Official sources

• Medicare.gov: Who pays first?
• Medicare.gov: When can I sign up for Medicare?
• Medicare.gov: Working past 65
• Medicare.gov: When does Medicare coverage start?
• CMS: Medicare & You 2027 handbook
• Medicare.gov: Enrollment forms (CMS-40B, CMS-L564)
• CMS: CMS-L564 Request for Employment Information
• IRS: Publication 969, Health Savings Accounts
• IRS: Rev. Proc. 2025-19 (2026 HSA limits)

How this guide is made: the Big Sioux Benefits Data Desk writes from official sources and checks each figure against the page it cites. This is general education, not advice about your situation. Plan details vary; confirm costs and coverage with Medicare.gov, the agency named above, or a licensed agent.