If I’m still working at 65, when do I sign up for Medicare?

Medigap also might be affected. If you sign up for Part B while you still have coverage from a large employer, you may have a difficult time getting a Medicare supplement policy, also called Medigap, after that employer coverage ends.

You have a right to buy any Medigap policy available in your state regardless of your health within six months of enrolling in Part B when you’re 65 or older. But if you enrolled in Part B while working for a large employer and don’t buy a Medigap policy until after that six months have passed, insurers in most states can reject you for coverage or charge more because of a preexisting health condition, except in special circumstances.

Do I need to enroll at 65 if I work for a small company?

The laws that prohibit large companies from requiring Medicare-eligible employees to drop the employer plan and sign up for Medicare don’t apply to companies with fewer than 20 people. In this situation, the employer decides.

You generally need to sign up for Medicare Parts A and B during your initial enrollment period (IEP), which begins three months before and ends three months after the month you turn 65. If you don’t, you could end up with large coverage gaps.

If the employer requires you to enroll in Medicare, which is most common, Medicare automatically becomes your primary coverage at 65 and the employer plan provides secondary coverage. In other words, Medicare settles your medical bills first, and the group plan pays only for services it covers but Medicare doesn’t.

This means if you fail to sign up for Medicare when required, you essentially will be left with no coverage.

Your first priority should be to ask the employer whether you’re required to sign up for Medicare when you turn 65 or if you’re eligible to receive Medicare earlier because of a disability. Find out exactly how the employer plan will fit in with Medicare. If you’re not required to sign up for Medicare, ask the employer to provide the decision in writing.

What about Medigap when working for a small employer? When Medicare is primary coverage and the employer plan is secondary, you have a guaranteed issue right to buy a Medigap policy within 63 days of losing that coverage, regardless of preexisting conditions. In this situation, signing up for Medicare Part B when you also have employer insurance won’t jeopardize your chances of buying a Medigap policy after your employment ends.

What if I get COBRA or retiree health coverage?

You still need to sign up for Medicare during your initial enrollment period if you continue your former employer’s health coverage through COBRA or if you have retiree health insurance.

Medicare becomes your primary coverage when you turn 65; COBRA coverage is secondary. You also could face coverage gaps if you don’t sign up for Medicare. Retiree health insurance benefits are generally secondary to Medicare, too.

You or your spouse must be actively working for the employer that provides your health insurance if you want to delay Medicare enrollment and qualify for a special enrollment period later.

Keep in mind  

A caveat on Part A. Many people sign up for Medicare Part A at 65, even if they’re working for a large employer, if it’s premium-free. But if you have a high-deductible health insurance policy and you want to continue contributing to a health savings account, you may want to delay enrolling in Part A.

You can’t do both simultaneously. After you enroll in either Medicare Part A or B, you can’t contribute to an HSA. Some people insured through large employers choose to delay signing up for both parts of Medicare until after they leave the job that provides health insurance. When that happens, you have up to eight months to enroll in Medicare Part B or else you’ll end up with permanent late enrollment penalties.

If you enroll in Part A after 65, that coverage is retroactive for up to six months, so make a note to end your HSA contributions before the date your coverage will take effect. Your HSA annual contribution limit is prorated based on the number of months you had an eligible high-deductible health insurance policy before your Medicare coverage became effective.

A sample calculation. If you retire in September and your Part A coverage will take effect six months before then, you can make three months’ worth of contributions to the HSA. That would be $1,212.48 if you’re 55 or older in 2023 and have self-only health insurance coverage.

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