This is the question we are asked most often, and it is the one where a confident wrong answer does the most damage. It also has a real answer, which depends on facts about your employer rather than on your preferences.
The number that decides it
Ask your human resources department, or your employer directly, how many employees the company has.
Twenty or more employees. Your employer’s group health plan pays first and Medicare pays second. Because the employer plan is the primary payer, you may delay Part B while you are actively working and covered by it, with no late penalty. When you eventually stop working, a special enrolment period opens and you take Part B then.
Fewer than twenty employees. Medicare pays first and the employer plan pays second. This is the trap. If you have not enrolled in Part B, there is no primary payer at all, and the group plan may pay very little of your bills — while you believed you were fully covered. In this situation you generally need Part B at 65, whatever the employer plan looks like.
The threshold is about the size of the employer, not the size of the plan or how good it is. Ask, get an answer, and if the answer is vague, ask again in writing.
Two things people get wrong
COBRA is not active employer coverage. Once you leave a job, COBRA continues the plan, but for Medicare purposes it does not count as coverage from active employment. Your special enrolment period runs from when the employment or the employer coverage ends, not from when COBRA ends. People spend their COBRA months believing they are protected, and find the Part B window closed behind them.
Retiree coverage is not active employer coverage either. The same logic applies for the same reason.
If you are being offered COBRA or a retiree plan as you leave a job at or after 65, treat that as the moment to sort out Part B, not a reason to wait.
The Part A question
Part A — hospital coverage — is usually premium-free if you or your spouse paid Medicare taxes long enough. For most people, taking Part A at 65 alongside an employer plan is harmless.
There is one exception, and it is a real one. If you contribute to a Health Savings Account, you must stop contributing once any part of Medicare begins, including premium-free Part A. Contributions made after that point are taxable and can carry a penalty.
Worse, if you delay Social Security past 65 and later claim it, Part A can be backdated by up to six months. HSA contributions made in that backdated stretch become retroactively improper. The safe practice is to stop HSA contributions about six months before you intend to enrol in Medicare or claim Social Security.
If you have an HSA, do not decide this alone. Speak to whoever handles your tax return as well as to us.
Drug coverage while you are still working
Your employer plan almost certainly includes prescription coverage, and it is probably creditable — meaning at least as good as a standard Part D plan. If it is creditable, you may delay Part D with no penalty.
Your plan must tell you in writing each year whether its drug coverage is creditable. Find that letter and keep it somewhere you will find it again. If you ever need to prove you had creditable coverage, that letter is the proof.
If the coverage is not creditable, the drug-coverage meter is running whether or not you feel it.
What actually happens when you retire
When you stop working, or when the employer coverage ends, a special enrolment period opens. It runs for eight months for Part B, and a shorter period — usually two months — for Part D and Advantage plans. Those two clocks are different lengths, which surprises people.
Take the shorter one seriously. Waiting the full eight months for Part B while your drug window has already shut is a common and avoidable muddle.
You will need your employer to complete a form confirming you had group coverage from active employment. Request it before you leave, while you still know who to ask. Retrieving that form from a former employer months later is a chore that people put off, and the deadline does not wait for it.
The other clock nobody mentions
If you delay Part B because you are still working, your Medigap open enrolment period does not start until Part B does. That is the six-month window in which a supplement must accept you regardless of your health.
So the plan often is: work, delay Part B, retire, start Part B, and your supplement window opens then. That is fine and it is intended. What is not fine is starting Part B, letting the six months pass while you decide, and discovering later that a supplement is now free to ask about your medical history.
If you are going to want a supplement, the moment your Part B begins is the moment to be having the conversation.
A short checklist
Before you decide anything, know:
- how many employees your employer has;
- whether your drug coverage is creditable, in writing;
- whether you contribute to an HSA;
- when your employment or employer coverage will actually end;
- whether you will want a supplement afterwards.
Those five answers settle it. None of them requires a plan comparison, a quotation, or a decision today.
Bring them to any adviser, including us. And if an adviser offers you a recommendation before asking how many people your employer has, find another adviser.
General information, not advice
This guide describes how Medicare generally works. It is not advice about your situation, and rules, dates and figures change — verify anything that matters to a decision against Medicare.gov,1-800-MEDICARE, or your State Health Insurance Assistance Program, all of which are free.
Rights and rules vary by state; this describes Ohio, Kentucky and Indiana. Clearview Medicare Advisers LLC is not connected with or endorsed by the United States government or the federal Medicare program.
Not sure how this applies to you?
Tell us your birthday and whether you are still working. That is usually enough for us to say which periods apply to you and by when. No charge and no obligation.
