Can you defer Medicare if you are still working?

Editorial team InsuredAndMore.com Published on October 29, 2026

Yes, you can delay Medicare when you turn 65 if you are still working and have qualifying group health coverage through your current employer or your spouse's current employer.

Whether you should delay depends heavily on the size of your employer and other benefits like a Health Savings Account (HSA). You can review official guidelines through the Official Medicare Working Past 65 Guide.

Employer Size Rules

20 or more employees: You can delay Medicare Part B and Part D without late penalties as long as you have active, creditable group health coverage. Your employer plan acts as the primary payer, and Medicare is secondary.
Fewer than 20 employees: You generally must sign up for Medicare Parts A and B when you turn 65. In this case, Medicare becomes your primary insurance, and your employer plan pays second. Failing to enroll means your employer plan may refuse to pay your medical bills.

Considerations for Each Part

Part A (Hospital Insurance): Most people get premium-free Part A if they worked and paid Medicare taxes for 10 years. If it is free, many workers enroll at 65 to act as secondary coverage, even if they keep working. However, you must delay Part A if you want to keep contributing to an HSA.
Part B (Medical Insurance): Carries a monthly premium. You can safely delay Part B without penalty while actively working at a company with 20+ employees. You get an 8-month Special Enrollment Period to sign up once you stop working or lose coverage. COBRA and retiree plans do not count as active employment, so they do not allow you to delay Part B without penalty.
Part D (Prescription Drug Coverage): You can delay Part D without penalty as long as your employer's drug coverage is "creditable" (at least as good as standard Medicare Part D).

The Health Savings Account (HSA) Rule

You cannot contribute to an HSA once you are enrolled in any part of Medicare (including premium-free Part A).
If you want to keep funding your HSA, you must stop contributions at least six months before you apply for Medicare, because Part A coverage can retroactively apply for up to six months.

How do I delay Medicare if I am still working?

You can delay Medicare enrollment without late penalties past age 65 if you are actively working and have qualifying group health coverage from an employer with 20 or more employees.

Employer Size Rules

20 or More Employees: You can safely delay Medicare Parts B and D without penalty. Your job-based plan acts as the primary payer, and Medicare pays second. You get an 8-month Special Enrollment Period (SEP) to sign up after your employment or coverage ends.
Fewer than 20 Employees: You generally must enroll in Medicare Parts A and B at age 65. Medicare becomes the primary payer, and failing to sign up can leave major coverage gaps and result in lifetime late penalties.

Important Caveats

Health Savings Accounts (HSAs): If you contribute to an HSA, stop your contributions at least six months before applying for Medicare. Medicare Part A can grant retroactive coverage for up to six months, causing tax penalties if HSA contributions overlap.
Prescription Drug Coverage: Your employer drug plan must be "creditable" (meaning it pays at least as much as standard Medicare prescription coverage) to avoid Part D late penalties later.
COBRA and Retiree Plans: COBRA and retiree health coverage do not count as active employment, so they do not allow you to delay Part B without risking penalties.

How much will Medicare cost me if I am still working?

Your Medicare costs while working depend primarily on your work history, your current income, and your employer's size. If you or your spouse paid Medicare taxes for at least 10 years (40 quarters), Medicare Part A is $0 per month. However, Medicare Part B costs a standard baseline of $202.90 per month, which could be higher depending on your income.

1. The Cost Breakdown by Medicare Part

If you choose to enroll in Medicare while still employed, the primary costs include:

Part A (Hospital Insurance): $0 per month for most people. If you do not have the 10-year tax history, it can cost up to $565 per month.
Part B (Medical Insurance): The standard monthly premium is $202.90.
Part D (Prescription Drugs): Premiums vary by private plan, averaging around $35 per month.

2. The High-Income Surcharge (IRMAA)

Because you are still working, your current earnings could trigger the Income-Related Monthly Adjustment Amount (IRMAA). Medicare uses your tax returns from two years prior to determine if you owe a surcharge. For example, if your modified adjusted gross income (MAGI) from two years ago was higher than $109,000 (individual) or $218,000 (joint), your Part B premium will scale upward from $284.00 to as high as $689.90 per month.

3. Your Employer's Size Dictates Your Strategy

You may not actually need to pay for Medicare Part B yet. Your next steps depend heavily on how many employees work at your company:

Employer Size	Rules for Enrolling & Costs	Action Plan
20+ Employees	Your employer plan remains primary. You can sign up for $0 Part A, but you can safely delay Part B to save on the $202.90+ monthly premium. You will not face late penalties as long as you maintain group coverage.	Enrolling in Part A is standard, but delay Part B and Part D unless your employer plan is exceptionally expensive or weak.
Fewer than 20 Employees	Medicare automatically becomes your primary insurer. Your employer plan becomes secondary and may refuse to pay until Medicare pays first.	You must enroll in Part A and Part B when you turn 65. Skipping Part B will cause severe coverage gaps and a permanent 10% late-enrollment penalty for every year you delayed.

⚠️ Critical Warning for Health Savings Accounts (HSAs)

If you actively contribute to a Health Savings Account (HSA) through your job, enrolling in any part of Medicare (including the free Part A) completely prohibits you from making pre-tax contributions to your HSA. Doing so triggers immediate tax penalties from the IRS.

My primary recommendation: If you work for a large employer (20+ employees) and wish to keep building your HSA tax-free, delay enrolling in Medicare entirely until you officially retire or lose that employer coverage. When you eventually stop working, you will get an 8-month Special Enrollment Period to sign up for Medicare penalty-free.

Should I enroll in Medicare at 65 if I am still working?

You do not need to enroll in Medicare at 65 if you have qualifying health coverage through a current employer with 20 or more employees.

📊 Company Size Rules

🏢 20+ Employees:
- You can delay Part B without penalty.
- Employer plan pays first (primary).
🏬 Fewer than 20 Employees:
- You must enroll in Parts A and B at 65.
- Medicare pays first (primary).

✅ Premium-Free Part A

🏥 Enroll in Part A: Usually free if you worked 10+ years.
💵 Cost: $0 monthly premium for most people.
🤝 Secondary Coverage: Acts as backup to your job plan.
⚠️ Exception: Stop if you contribute to an HSA.

⚠️ Health Savings Account (HSA) Restrictions

🛑 No Dual Contributions: Enrolling in any Medicare part stops HSA eligibility.
🗓️ Action: Stop HSA deposits 6 months before applying.

🗓️ Action Phases

🔍 Phase 1 (Age 64 and 9 months): Ask HR if your plan is primary or secondary.
📝 Phase 2 (Birthday month): Enroll in Part A if free and not using an HSA.
🚪 Phase 3 (Retirement): Use the 8-month Special Enrollment Period for Part B.

Do you have to decline Medicare if you are still working?

No, you do not have to enroll in Medicare at age 65 if you are still working and have qualifying group health coverage through your job or your spouse's job.

When You Can Delay Medicare

Large Employers (20 or more employees): You can safely delay enrolling in Medicare Part B and Part D without penalty as long as you have active, creditable employer coverage.
Premium-Free Part A: Many people sign up for Part A at age 65 because it is usually free, but you can delay it if you are not collecting Social Security.
Special Enrollment Period: When you eventually stop working or lose your job-based insurance, you get an 8-month window to sign up for Part B without late penalties.

When You Might Not Be Able to Delay

Small Employers (Fewer than 20 employees): Small businesses can require you to enroll in Medicare Parts A and B at age 65 so that Medicare becomes your primary insurance.
Already Collecting Social Security: If you already receive Social Security benefits when you turn 65, you are automatically enrolled in Parts A and B. You can decline Part B, but you cannot decline Part A without withdrawing your Social Security claim and repaying benefits received.
Health Savings Accounts (HSAs): You must stop contributing to an HSA at least six months before you enroll in any part of Medicare to avoid tax penalties.

You can review specific guidelines on the official Medicare Working Past 65 page.

Medicare Eligible but Still Working - What Do You Do?

9 related questions found

Can I drop my employer health insurance and go on Medicare?

Yes, you can drop your employer health insurance and switch to Medicare as soon as you become eligible, which is usually at age 65.

Key Factors to Consider

Family Coverage: Medicare covers only one person. If your spouse or children rely on your employer health plan, dropping it means they will need to find another insurance option.
Health Savings Accounts (HSAs): You cannot contribute to an HSA once you enroll in Medicare. You may need to stop contributions months before your transition to avoid tax penalties.
Building a Full Plan: Original Medicare includes Part A (hospital) and Part B (medical). Because it does not cover prescription drugs or all out-of-pocket costs, you will likely need a Medicare.gov Part D drug plan or a Medigap supplement, or a bundled Medicare Advantage plan.
Employer Size Rules: If your company has fewer than 20 employees, Medicare is usually your primary insurance anyway. If your company has 20 or more employees, your employer plan acts as primary, giving you the choice to delay Medicare or drop your work plan. Review your choices carefully using guidelines from UnitedHealthcare.

How to Make the Switch

Confirm Medicare Start Date: Sign up for Medicare before you cancel your work plan to avoid any gaps in coverage.
Notify Your Employer: Contact your human resources or benefits department to inform them you are dropping their plan and provide your effective date.
Set the End Date: Ask your employer to set your final day of coverage for the day before your Medicare benefits begin.

What is the big mistake people make with Medicare?

The single biggest and most costly mistake people make with Medicare is missing enrollment deadlines, leading to permanent late-enrollment penalties and gaps in coverage.

Missing Enrollment Deadlines

Initial Enrollment Period (IEP): This window lasts for seven months. It starts three months before the month you turn 65, includes your birthday month, and ends three months after.
Late Penalties: Failing to sign up for Part B or Part D on time can trigger permanent monthly or yearly financial penalties added to your premiums.
Delayed Enrollment Confusion: Many people wrongly assume they can delay Medicare past age 65 just because they have health coverage like COBRA, a marketplace plan, or small-employer insurance.

Other Costly Medicare Mistakes

Ignoring Annual Changes: Sticking with automatic renewal without reading the Annual Notice of Change (ANOC) can result in unexpected costs, as drug lists and doctor networks shift every year.
Choosing Solely by Low Premiums: Picking a plan based only on a low monthly cost while ignoring total out-of-pocket expenses like deductibles, copays, and coinsurance.
Missing the Medigap Window: Forgetting to apply for a Medigap (Medicare Supplement) policy during your open enrollment window. After this six-month period, insurers can use medical underwriting to charge more or deny coverage.
Skipping Financial Assistance: Overlooking programs like Medicare Savings Programs or Part D Extra Help that assist with out-of-pocket medical and prescription expenses.

How does Medicare work if I am still working?

If you are still working when you turn 65, how Medicare works depends primarily on the number of employees at your company.

You can review official details and sign up through the Official Medicare Website.

Employers with 20 or More Employees

Primary vs. Secondary: Your employer's group health plan pays first as your primary insurance, and Medicare acts as secondary insurance.
Enrollment Choice: You can delay enrolling in Medicare Part B and Part D without facing late penalties as long as you have active group coverage.
Part A (Hospital Insurance): Most people sign up for premium-free Part A at age 65 because it costs nothing if you or your spouse paid Medicare taxes for 10 years. However, you must stop contributing to a Health Savings Account (HSA) if you enroll in Part A.

Employers with Fewer than 20 Employees

Primary vs. Secondary: Medicare pays first as your primary insurance, and your employer's plan pays secondary.
Enrollment Requirement: You generally need to enroll in both Medicare Part A and Part B when you turn 65.
Risk of Delay: If you do not sign up, your employer's insurance may refuse to pay for your medical bills.

Leaving Your Job Later

Special Enrollment Period: When you stop working or lose your job-based health coverage, you get an 8-month Special Enrollment Period to sign up for Part B without a penalty.

What are the 6 things Medicare doesn't cover?

Original Medicare (Parts A and B) does not cover several major healthcare needs, most notably routine dental care, eye exams and glasses, hearing aids, long-term custodial care, care outside the U.S., and cosmetic surgery.

Key Uncovered Services

Routine Dental Care: Original Medicare excludes routine cleanings, fillings, tooth extractions, root canals, and dentures.
Vision Care: Routine eye exams, eyeglasses, and contact lenses are not covered, except for specific post-cataract surgery needs or certain diabetic eye exams.
Hearing Aids: Routine hearing exams, fittings, and hearing aids are completely excluded from standard coverage.
Long-Term Care: Medicare pays for short-term skilled nursing, but it does not cover ongoing custodial care (help with daily activities like bathing, dressing, or eating) in a nursing home or at home.
Care Outside the U.S.: Medical treatment received while traveling or living abroad is generally not covered.
Cosmetic Surgery: Elective procedures meant to alter appearance rather than treat a specific illness or injury are excluded.

You can review the official breakdown of excluded services directly on the Official Medicare Coverage Guide.

Does Social Security count as income towards Medicare premiums?

Yes, a portion of your Social Security benefits can count as income toward determining your Medicare premiums, but only the taxable portion is included.

Medicare premiums are calculated based on your Modified Adjusted Gross Income (MAGI). For Medicare purposes, your MAGI is your Adjusted Gross Income (AGI) plus any tax-exempt interest (such as municipal bond interest).

How Social Security Affects Your Premiums

The Taxable Portion Counts: When you file your federal taxes, depending on your overall "combined income," up to 85% of your Social Security benefits may be considered taxable income. This taxable amount is included in your AGI and directly flows into your Medicare MAGI calculation.
The Non-Taxable Portion is Excluded: The remaining percentage of your Social Security benefit that is not subject to federal income tax is entirely excluded and does not count toward your Medicare calculation.

Why This Matters: IRMAA

Most people pay the standard premium for Medicare Part B ($202.90 per month) and a baseline premium for Part D. However, if your total MAGI—including that taxable Social Security portion—crosses a certain threshold, you will be hit with a high-income surcharge called the Income-Related Monthly Adjustment Amount (IRMAA).

The Thresholds: For Medicare premiums, the Social Security Administration uses a two-year tax lookback. Your premiums are determined by the MAGI reported on your tax return from two years prior.
The Cliffs: IRMAA is a "cliff" surcharge. If your taxable Social Security pushes you even $1 over the threshold, your monthly premium for both Part B and Part D will jump to the next bracket.

A Note on Premium Deductions

If you are already collecting Social Security benefits, Medicare will automatically deduct your Part B (and sometimes Part D) premiums directly from your monthly Social Security check before it is deposited. Even though you do not "see" this money, the gross amount of your benefit is still used by the IRS to figure out what portion is taxable and subsequently counted toward future Medicare adjustments.